What moved this week and what it means for expats in SE Asia
Markets, currencies, and macro events filtered through one lens: what does it mean for a European professional living in Malaysia, Singapore, or Thailand with assets spread across multiple jurisdictions?
The Federal Reserve raised rates for the first time since 2023, the Bank of England held with three votes against, and sterling fell against every currency our clients spend in
The Federal Reserve raised its policy rate on 16 September by a quarter point, to a range of 3.75% to 4%. The vote was unanimous. It is the first American rate rise since July 2023. Chairman Kevin Warsh said inflation had been too high for too long, and the statement said the move would support a timelier return to the 2% target. The committee's own projections now show sixteen of its eighteen members expecting another rise before the end of the year, with four of those expecting two. For anyone holding a dollar mortgage or a floating-rate facility in the Gulf, that cost rose this week, and the Fed has said plainly it may rise again.
The Bank of England held Bank Rate at 3.75% the following day, but the vote was 6-3. Megan Greene, Catherine Mann and Huw Pill each voted to raise it to 4%. British inflation rose to 3.1% in August, a five-month high, driven mainly by motor fuel, where annual inflation reached 23%. The statement carried an unusual condition: if the conflict in the Middle East continues for an extended period, which the Bank said appears to be the case, policy may have to tighten. Anyone on a British tracker mortgage, or holding a fixed rate that matures next year, should plan on the basis that the next British move is more likely up than down.
Oil eased, and the reason matters more than the number. Brent settled at $103.87 on Friday, down about 1% on the week. Saudi Arabia's East-West pipeline was shut on 11 September after a drone strike on a pumping station, and the market first read that as a supply shock. Satellite imagery then showed Saudi Arabia moving 2.8 million barrels a day through the Strait of Hormuz over six days, against 700,000 a day in August, and Aramco expects about half the pipeline's capacity back within days. None of that reopens the strait. Four commodity vessels were detected crossing it on the Thursday, and the regional talks Oman postponed on 13 September still have no new date. Freight, fuel and insurance costs across Southeast Asia stay exposed to the same waterway they have been exposed to all year.
Sterling fell against every currency our clients spend in. It lost 1.21% against the dollar, 0.97% against the ringgit, 0.39% against the Singapore dollar and 0.35% against the baht. That is the exact inverse of the week before, when the ringgit and the baht were its two best crosses. The euro fell too, by 1.14% against the dollar, so euro earners in Malaysia lost 0.89% on EUR/MYR. The ringgit slipped 0.25% against the dollar but gained against sterling, the euro and the yen. A Dutch professional in Kuala Lumpur and a British one in Bangkok both converted at a worse rate this week than last.
Two British dates are now close. The consultation on raising the normal minimum pension age to 57 closes on 28 September, seven days away. It covers people who will be 55 or 56 on 5 April 2028, and it matters to anyone planning to draw a British pension before 57. The Budget is on 28 October, thirty-seven days away, and the Federal Reserve's next decision falls on the same day. Speculation about the £268,275 cap on the tax-free lump sum continues, and nothing has been published, proposed or consulted on.
American shares split. The Nasdaq rose 0.72% to 26,522.55, the only one of the four to gain. The S&P 500 was flat at 7,650.50, the Dow fell 1.69% to 51,682.64, and the Russell 2000 of smaller companies fell 1.50% to 2,860.40. Volatility fell: the VIX closed at 14.81, down 6.5%, in a week that contained two central bank decisions. Japan's Nikkei rose 1.57% to 65,018.95 and Hong Kong's Hang Seng slipped 0.22% to 24,751. Gold rose for the first week in four, to $4,383, because oil fell and the inflation worry eased with it.
Currency rates relevant to European expats in SE Asia
As at Friday 18 September close. Rates are indicative. Source: European Central Bank reference rates.
Currency context for this week
Sterling had no good cross this week. It fell 0.97% against the ringgit to 5.45, 0.39% against the Singapore dollar to 1.71 and 0.35% against the baht to 44.51. Seven days earlier the ringgit and the baht were the two currencies it gained most against. The euro was weaker still against the dollar, down 1.14%, and EUR/MYR fell 0.89% to 4.68, so euro-funded expats in Malaysia gave back the two firmer weeks they had just had. Two consecutive weeks pointing in opposite directions is the argument for a standing monthly transfer rather than a judgement made on any single Friday.
The ringgit itself went two ways. It slipped 0.25% against the dollar, a third weekly fall, because the Fed's rise lifted the dollar. Against sterling, the euro and the yen it gained. Someone paid in dollars and spending in ringgit was slightly better off this week. Someone paid in ringgit with a mortgage in euros or sterling at home was better off too, which is unusual, because both legs moved the same way. One note on the numbers above: the European Central Bank reference print and Bank Negara's closing print were about 0.37% apart this week, where a week ago they almost matched. The rates here use the ECB print throughout, so the crosses stay consistent with one another.
What this week's moves mean for your portfolio
A rate rise that had been 85% to 90% priced arrived, and the volatility index fell 6.5% in the same week. That is what a fully anticipated event looks like from inside a portfolio. The repricing happened across the weeks before the meeting. Anyone who repositioned in the days before the decision paid for the trade and was paid nothing for being right.
The bond picture is more finely balanced than the headlines suggest. Ten-year gilts finished the week near 5.29%, roughly where they started, after falling more than ten basis points on the Thursday and rising again on the Friday on stronger retail sales. They remain close to a nineteen-year high. For anyone weighing a British defined benefit transfer, higher gilt yields still mean lower transfer values, and the direction of travel still argues against transferring out. The same yields let a fixed-income allocation lock in more income than it could a year ago. Both are reasons to know where your numbers stand before 28 October.
Gold rose for the first week in four, and it rose because oil fell. That is eight months running in which gold has moved on the dollar and on interest rates rather than on the thing most people buy it for. Held as structural ballast inside a diversified portfolio, sized to do an ordinary job, it earns its place. A globally diversified core held through Irish-domiciled accumulating UCITS funds needed no view this week on the Federal Reserve, the Bank of England or the Strait of Hormuz. It needed the right wrapper and the right currency, with no American estate-tax exposure, and that work is done once.
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