By BLOOMBERG

Southeast Asian currencies look poised to outperform their northern peers as commodity prices remain elevated and tourist arrivals rebound, according to Goldman Sachs Group Inc. and Bank of America Securities.

The currencies of Singapore, Thailand and Malaysia stand to benefit as tourism accounts for a bigger proportion of these economies, Goldman strategists including Danny Suwanapruti wrote in an April 3 note. Bank of America also likes the Thai baht and Malaysian ringgit while Australia & New Zealand Banking Group Ltd. favors the Singapore dollar and Indonesian rupiah.

A gradual reopening of borders in Asia is fueling a hunt for trades that will derive the biggest boost from a recovery in consumption and investment. Soaring commodity prices will boost the coffers of exporters such as Indonesia and Malaysia although some analysts warn the damping effect on global growth may outweigh the positives. 

“Higher commodity prices should be most beneficial to Malaysia and Indonesia’s terms of trade in the region,” the Goldman analysts wrote. “We think the won and Taiwan dollar should underperform given the expeditious pace of Fed normalization, slowing Chinese growth and persistent equity outflows.”

The predictions were borne out in the first quarter when the baht and Singapore dollar held up better than the Taiwanese and South Korean currencies against a stronger greenback.

Still, the picture becomes murkier if the performances of the past one month are scrutinized. The baht, one of Goldman’s top picks, is languishing at the bottom of emerging Asia’s rankings with a decline of over 2%. The ringgit is another laggard, falling almost 1% as crude oil gave up some of its sizzling gains.

Idiosyncratic factors also figure in the equation. For example, the Singapore dollar will benefit from the central bank’s hawkish bias, according to ANZ.

“We expect the Monetary Authority of Singapore to be aggressive in their tightening in April with an upward re-centering and increase in the slope,” said Khoon Goh, head of Asia research at ANZ. “This will help push the Singapore dollar stronger.”

Northern Exposure

In contrast, rising U.S. interest rates are likely to hit Northeast Asia’s flow-sensitive currencies.

Portfolio outflows will continue to weigh on the won despite its recent pullback from the lowest in almost two years, Bank of America strategists including Claudio Piron wrote in a March 29 note. 

Additionally, caution toward Taiwan remains high with the war in Ukraine entering a second month, while the current repricing of U.S. rate-hike expectations has resulted in valuation pressure on the island’s equities, they said.