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Most Asian FX boosted by increasingly dovish comments; Thai decision eyed

Tan KW
Publish date: Wed, 29 Nov 2023, 03:12 PM
Tan KW
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BENGALURU  Most emerging Asian currencies hit multi-month highs on Wednesday, with the Taiwan dollar and Malaysian ringgit leading the pack, as the US dollar slid to a more than three-month low on increasingly dovish commentary from the Federal Reserve, while investors also awaited a Thai central bank decision on rates.

The MSCI International Emerging Market Currency Index rose nearly 0.3%, hovering near a 19-month peak.

Fed governor Christopher Waller, a prominent hawkish voice, said overnight that rate cuts could begin in a matter of months, provided inflation keeps falling, sparking a flurry of exits from the safe-haven US dollar and into riskier assets. 

"The rally in EM Asia FX and equities has legs if we do not get any positive surprises in the US data," Nicholas Chia, macro strategist at Standard Chartered said, referring to the Personal Consumption Expenditure and ISM Manufacturing Index data due later this week.

The Taiwan dollar appreciated the most among emerging Asian currencies, rising as much as 0.7% to hit its highest since late July, while the Malaysian ringgit strengthened 0.6%.

The Singapore dollar also firmed as much as 0.2% to reach a four-month high, while the Philippines peso reached its strongest since early August, gaining more than 0.2%.

The dollar index, which measures the strength of the US currency against six major rivals, stood at 102.61 as at 0340 GMT.

"Attention will now move to chair Powell’s speech on Friday, to see if the tone points to a clear pivot towards easing," Daragh Maher, head of research, Americas and head of FX strategy, US, at HSBC, said in a note.

"If it materialises, this would clearly be a challenge to our bullish USD view."

Thailand's baht was flat and its stocks fell about 0.2% ahead of a policy decision later in the day, when the central bank is expected to stand pat on its interest rates. 

The South Korean central bank is set to announce its policy decision on Thursday, with a pause in rate increases expected. The currency gained about 0.3%. 

Among Asian equities, stocks in Singapore, Indonesia and Taiwan rose between 0.1% and 0.4%. Markets in South Korea and Philippines fell 0.2% and 0.3% respectively.

Highlights

  • Indonesia's benchmark 10-year bond yield falls to 6.650%.
  • Creditor nations agree on Sri Lanka debt restructuring — Jiji.
  • Vietnam parliament approves global minimum corporate tax.

Asia stock indexes and currencies at 0340 GMT

COUNTRY

FX RIC

FX DAILY %

FX YTD %

INDEX

STOCKS DAILY %

STOCKS YTD %

Japan

+0.18

-10.94

<.N225>

0.13

28.19

China

+0.14

-3.18

<.SSEC>

-0.31

-1.95

India

+0.03

-0.70

<.NSEI>

0.00

9.86

Indonesia

+0.29

+1.17

<.JKSE>

0.15

2.93

Malaysia

+0.49

-5.32

<.KLSE>

0.04

-3.14

Philippines

+0.22

+0.66

<.PSI>

-0.31

-4.21

S.Korea

+0.29

-1.98

<.KS11>

-0.16

12.58

Singapore

+0.09

+0.75

<.STI>

0.36

-5.36

Taiwan

+0.65

-1.78

<.TWII>

0.02

22.68

Thailand

-0.06

-0.43

<.SETI>

-0.30

-16.27

 


  - Reuters

 

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