In an interesting reversal of 2013’s taper tantrum, the most resilient currencies in the wake of the recent global meltdown are the ones considered the most vulnerable to external shocks. The top three performing currencies among Asia’s emerging markets over the past three months are the Thai baht, the Indonesia rupiah and the Malaysian ringgit.

It appears that their relatively lower exposure to China and the US Federal Reserve have helped them outperform currencies in northern Asia, which are more closely tied to China. Around 40% of Taiwan’s overseas sales and 31% of South Korea’s go to the mainland, according to Bloomberg data. That compares with 18% for Malaysia, 15% for Thailand and 12% for Indonesia.

“The market has moved away from being wary of Fed tightening to pricing in a Fed relent and that’s benefiting countries with higher-yielding assets like Indonesia for now,” Mallika Sachdeva, a foreign-exchange strategist at Deutsche Bank in Singapore told Bloomberg. “North Asian currencies are being treated as proxies for China currency stress.” The Deutsche Bank favors the rupiah and the ringgit over the South Korean won and Taiwan dollar, she said.

Over the past three months, the ringgit rose 4.9%, the baht gained 1% and the rupiah rose 0.9%. All other Asian emerging-market currencies have dropped, led by a 4.2% decline in the won.

As funds flee China, foreign investors like how Indonesia’s slowing inflation and faster growth, last year’s 2.7% increase in Thailand’s gross domestic product, and how Malaysia’s government managed to keep its budget deficit within target.

“If the dollar strengthens again and that is our base case going forward, then Southeast Asian currencies can also weaken, but with a lower beta than North Asian currencies,” Nizam Idris, head of strategy for fixed income and currencies at Macquarie Bank in Singapore told Bloomberg.

Idris said the baht is less vulnerable than the rupiah or ringgit as foreign funds hold a smaller proportion of Thai sovereign notes.

The resilience of Southeast Asian exchange rates has increased demand for the their local-currency sovereign debt. Indonesian notes have returned 5.4% over the last three months, the most in Asia, followed by a 5% gain in Thai securities, Bloomberg indexes show.

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