SOUTH-EAST ASIA (Reuters): Emerging Asian currencies gained ground on Friday and extended their rally to a fourth-straight session, while being on track for a sixth-consecutive weekly gain, as investors moved towards riskier plays on rising concerns over U.S. fiscal health.
The Indonesian rupiah added 0.3% while the Malaysian ringgit and Philippine peso rose between 0.5% and 0.7%.
The Philippine peso jumped sharply after having eked out small gains in the previous sessions on mounting political uncertainty in the country where the President asked his cabinet members to resign following poor Senate elections performance last week.
Sentiment around the peso improved on Friday after the domestic central bank governor said inflation should remain low in the coming months with growth expected to moderate this year and next.
The Bangko Sentral ng Pilipinas resumed its easing cycle in April by cutting the key interest rate by 25 basis points.
“Political uncertainty on domestic front has picked up, which could weigh on sentiment and growth. Geopolitical risks due to border clashes with China could impact tourism and export flows,” said Bank of America analysts in a note.
The benchmark index in Manila traded 1.1% in the green. Elsewhere, the MSCI Emerging Market Currency Index added more than 0.2% this week, building on five prior weeks of gains and matching a streak last seen from July to September 2024.
Investor caution lingered as markets continued to digest the implications of President Donald Trump’s tax cut bill, which is projected to swell the U.S. debt burden by $3.8 trillion over the next decade.
The rupiah was set to add near 1% in a week where Bank Indonesia (BI) lowered interest rates to boost economic growth in the country and vowed to stabilise the currency by further intervening in the local market.
“Over medium-term, Indonesia could benefit from higher conversion of USD deposits from corporates and retails,” said analysts at Bank of America.
“That would support overall Balance of Payments and reduce the need for BI to intervene either directly or via regulatory tightening.”
The Malaysian ringgit, Taiwan dollar and South Korean won were on track to add between 0.5% and 1.7% for the week.
Equities in emerging Asia rose on Friday as beaten-down Treasuries attracted buyers after U.S. President Donald Trump’s tax bill narrowly cleared the House of Representatives.
Share markets in Indonesia, Malaysia and Thailand gained 0.4%, 0.5% and 0.6% respectively. Improved trade sentiment also lifted Asian stocks, as China and U.S. maintained high-level engagement.
A Thursday communication between senior officials underscored continued dialogue between the two sides following their trade truce earlier this month. – Reuters
