Asian Currency

Asian stocks gain on US rate cut prospects; FX subdued

BENGALURU (April 4): Most Asian stocks rose on Thursday, driven by optimism about potential US interest rate cuts, even as the timing of the move remained uncertain, while regional currencies were little changed.

South Korean and Indonesian stocks advanced 1.3% and 0.8%, respectively. Singapore’s benchmark index, among the worst performers in Asia so far this year, rose 0.5%.

Data on Wednesday showed lower growth in the US services industry and bolstered optimism over the potential easing of monetary policy. Federal Reserve (Fed) Chair Jerome Powell’s reaffirmation about lowering rates also aided sentiment.

Most Asian currencies were subdued, though they pared some losses from the previous session after the greenback eased.

The Malaysian ringgit appreciated 0.3%, snapping a three-day losing streak. South Korea’s won added 0.1%, while the Indian rupee was unchanged.

The US dollar index was last steady at 104.21.  

The ringgit is undervalued, said Maybank’s head of FX research Saktiandi Supaat, adding that “fundamentally, the ringgit remains strong in terms of eventual export recovery”.

The Thai baht, meanwhile, was last down 0.2% at 36.675 per US dollar.

Southeast Asia’s second-largest economy, Thailand, has recently faced weak exports and domestic demand, pressurising its currency, which is the worst performer so far this year in the region.

Among other currencies, the Philippine peso pared back earlier gains after the country cut its growth target for 2024 and turned less optimistic about next year’s outlook due to high inflation. It was last down 0.1%.

A flurry of central bank decisions in the Philippines, Singapore and Thailand are due next week.

The Bangko Sentral ng Pilipinas (BSP) is in the spotlight after it postponed its monetary policy meeting to Monday to wait for the release of inflation data scheduled for Friday.

A Reuters poll suggests the BSP will keep its key policy rate on hold for a fourth meeting and at least until the third quarter, later than when the Fed is expected to start reducing its rates.

“I don’t think the central banks in the region would want to move before the Fed because if they do, they would have undue pressure on their currencies,” Maybank’s Supaat said.

The markets in China, Hong Kong and Taiwan were closed on Thursday for public holidays.

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