Manila: Exports from India and China are the most likely to be harmed by currency strength—or boosted by weakness—among Asian economies, underscoring the two giant’s sensitivity to the swings of foreign exchange markets.

An analysis by Bloomberg Economics’ Tamara Henderson shows the historical link between exports and exchange rates was the highest in India in the decade through 2017, followed by China, Malaysia and Japan. Singapore was a notable outlier—exports actually do better when its currency firms up.

For a region that’s heavily dependent on exports, the relationship to currency performance explains why Asia’s policy makers stepped up action last year as the US dollar weakened. With global trade risks rising this year as the US plans tariffs on a range of products, the pressure to protect the competitiveness of export industries is set to build.

“Policy makers will likely prefer to keep their currencies competitive relative to trade rivals," said Henderson, an economist based in Singapore. “This would be consistent with ‘smoothing’ operations in the face of currency strength, evident in the buildup of reserves. Asia’s export outlook for 2018 has also dimmed with the Trump administration now acting on its protectionist threats."

Authorities in Thailand and South Korea have already voiced concern over the strength of their currencies. In countries like Malaysia, Thailand and Singapore, exports make up more than half of gross domestic product.

Exports from India had the strongest tie to currency performance in Asia in the past decade, suggesting the rupee’s gains tend to detract from the performance of merchandise exports while currency losses increased their appeal.

China, Japan and Malaysia also had relatively strong negative correlations, near -0.6. The average for Asia was -0.4 in the past decade. Singapore’s shipments, about half of which are re-exports, were more resilient to currency gains, Henderson said.

Malaysia’s ringgit has gained the most in Asia in the year through January, according to data from the Bank of International Settlements. The Philippine peso and Indonesia’s rupiah were the biggest losers. Bloomberg