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Asian FX log monthly gains on growing Fed rate cut bets

Tan KW
Publish date: Thu, 30 Nov 2023, 05:13 PM
Tan KW
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BENGALURU Most emerging Asian currencies were set to log monthly gains against the US dollar on Thursday, on rising bets that the Federal Reserve would cut policy rates earlier than expected, triggering entries into riskier assets.

The MSCI International Emerging Market Currency Index rose about 0.3% and was set to mark its best month in a year. It is up nearly 3% for November.

The South Korean won rose about 4.5% for the month, its biggest gain since last November, while the Taiwan dollar and Thailand's baht rose about 3.8% and 2.8% respectively, with the former snapping a seven-month losing run.

The Indonesian rupiah also snapped a six-month losing streak to gain nearly 2.5%, while the Vietnamese dong recorded its first monthly gain since March.

In contrast, the Indian rupee was the only major Asian loser, falling for the fifth straight month and down about 0.1% in November. The currency was flat as of 0705 GMT.

Meanwhile, all eyes are on the US personal consumption expenditure inflation report, due later in the global day, where market participants are likely to get a clearer idea on where interest rates are headed.

"Markets are increasingly coming to terms that the Fed is likely done tightening for the current cycle and expectations are building up for the Fed to cut as much as nearly 120 bps (basis points) for 2024, while a May cut is now fully priced (in)," Christopher Wong, a currency strategist with OCBC, said.

Investors appeared to take cues from Fed governor Waller's comments earlier this week, with increased bets for the first rate cut taking place as soon as March.

On the day, the Indonesian rupiah was the biggest loser, dropping around 0.6%, while the Thai baht fell 0.3%, as the dollar partially regained some ground and as weak economic data from Asia's largest economy added to growth woes. 

At 0705 GMT, the dollar index stood at 102.75, even as it hovered near a three-month low and was set for its worst month since last year.

The Philippines peso, Malaysian ringgit and the Taiwan dollar traded between flat to marginally lower.

The South Korean won pared initial gains to trade lower. The country's central bank kept its benchmark interest rate unchanged again, even as it cut its economic growth outlook.

Separately, India will report its quarterly GDP data later in the day, with growth expected to moderate to 6.8% in the July-September quarter, from 7.8% in the previous quarter.

Among Asian equities, stocks in Singapore, Thailand, Malaysia and Philippines fell between 0.4% and 0.7%.

Highlights

  • Indonesia's benchmark 10-year bond yield falls to 6.604%.
  • Poll: Investors bullish on most Asian FX as US interest rate bets shift.
  • Thai October factory output falls 4.3% year-on-year, more than forecast.

Asia stock indexes and currencies at 0705 GMT

COUNTRY

FX RIC

FX DAILY %

FX YTD %

INDEX

STOCKS DAILY %

STOCKS YTD %

Japan

+0.20

-10.77

<.N225>

0.50

28.33

China

-0.03

-3.18

<.SSEC>

0.25

-1.94

India

-0.02

-0.74

<.NSEI>

-0.23

10.74

Indonesia

-0.63

+0.50

<.JKSE>

0.79

3.52

Malaysia

-0.08

-5.44

<.KLSE>

-0.06

-3.36

Philippines

+0.05

+0.51

<.PSI>

-0.55

-5.12

S.Korea

-0.03

-1.98

<.KS11>

0.61

13.36

Singapore

+0.05

+0.57

<.STI>

-0.35

-5.46

Taiwan

+0.03

-1.70

<.TWII>

0.36

23.31

Thailand

-0.40

-0.99

<.SETI>

-0.51

-17.26

 


  - Reuters

 

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