Asian currencies were subdued on Thursday as the dollar firmed on improving prospects of a Donald Trump presidency, while most regional stocks gained, with Thai equities staying at a one-year high a day after a surprise rate cut by its central bank.
The Malaysian ringgit, the region’s best performing currency this year, fell 0.4% and the South Korean won was down 0.3%.
The U.S. dollar hovered near an 11-week high, supported by recent upbeat data that led traders to price in a smaller rate cut. An improvement in Trump’s fortunes in the presidential election next month also buoyed the greenback.
Meanwhile, the Bank of Thailand (BOT) delivered a surprise 25-basis-point rate reduction on Wednesday, but indicated the cut was not the start of an easing cycle.
Equities in Bangkok rose 0.7%, staying at a more than one-year high, while the baht, one of the few regional currencies with year-to-date gains so far, inched 0.1% lower.
“While the ASEAN-6 central banks have a dovish tendency, they are not on a pre-determined rate cut path. The quantum and timing are likely to be dictated by financial market volatility, domestic growth-inflation mix and U.S. Fed’s moves,” DBS analysts said in a note.
The Philippine central bank also delivered a 25-basis-point rate cut, while Bank Indonesia kept rates unchanged, both as expected.
The depreciation of the rupiah has previously forced the central bank to pause and await better opportunities to ease policy, Barclays analysts said.
“Historically, bouts of IDR depreciation – as well as poor trade or current account balance data prints – have resulted in a start-stop pattern in previous BI rate-cutting cycles,” they said.
The Indonesian rupiah ticked 0.1% higher and stocks rose 1%. Other regional equities were also higher, with Singapore stocks rising as much as 1.1%, scaling their highest level in over three weeks.
Taiwanese stocks closed up 0.2%. Chip giant TSMC fell almost 1% in the session. It reported a forecast-beating 54% jump in third-quarter profit.
Elsewhere, China promised to improve builders’ access to funding for finishing thousands of projects, and the central bank’s deputy governor said cuts to down payments had already improved confidence and sales.
Chinese equities fell 0.7%, while the yuan was largely flat. Investors are now awaiting China’s third-quarter GDP data due on Friday.
HIGHLIGHTS:
** Indonesia’s Prabowo gets support from biggest party, but no coalition deal yet
** Japan’s exports fall for first time in 10 months on China, US slowdown – Reuters
