Asian Currency

Taiwan dollar, stocks gain on chip rally; other Asian assets meander


BENGALURU (Jan 19): Taiwanese stocks got a boost from a risk-on rally in the world’s largest contract maker TSMC on Friday, while the Taiwan dollar gained as investor focus shifted away from post-election turbulence.

Most other emerging Asian currencies clocked modest gains on Friday, but were however set to end the week on a sour note, as traders rolled back their bets of an interest rate cut by the US Federal Reserve in March, helping the dollar strengthen.

The Taiwan dollar appreciated 0.4% to mark its biggest daily gain since late December, while the main stocks index surged more than 2% to clock their best day since early November, fuelled by a 6% jump in Taiwan Semiconductor Manufacturing (TSMC) shares after a bullish outlook.

The Taiwan dollar, however, was on track to pencil in a near 1% loss over the week, its third consecutive week in the red, as post-election turbulence and geopolitical tensions with China pressured the currency earlier in the week.

“Anxiety regarding Northeast Asia geopolitical risks should ease to the relief of the TWD (Taiwan dollar), as China’s reaction to the Taiwan election result has been measured,” analysts at Bank of Singapore said.

“The market is likely to shift focus back to fundamental factors of a better semiconductor industry outlook and lower global yields, which is more likely to increase foreign flows and be supportive for the TWD over the medium term.”

Elsewhere in emerging Asia, the South Korean won firmed up to 0.5%, although for the week, it was set to end 1.8% lower. Stocks in Seoul gained as much as 1.6% for the day, but were on track for their third straight weekly loss of more than 2%.

In Singapore, the dollar ticked higher while shares advanced 0.5%. Investors are now awaiting the Monetary Authority of Singapore’s (MAS) first meeting of the year later this month, where the market widely expects that it will keep its monetary settings unchanged.

Analysts at Maybank remain positive on the Singapore dollar in the medium-term, but added that the currency performance could “taper” as Fed begins to cut rates.

Other regional currencies such as the Indonesian rupiah, Thai baht, the Malaysian ringgit and the Indian rupee treaded water without direction. However, all currencies were poised to end the week in the red.

Equities in Thailand, Malaysia and India advanced between 0.4% and 0.7%, while those in Indonesia ticked lower.

Meanwhile, advance estimates showed that the Malaysian economy likely grew faster in the December quarter than the prior three months, with annual growth expected to come in at 3.8%, below the government’s projection of a 4% expansion.

Next week, Bank Negara Malaysia will meet for the first time this year to deliberate on monetary policy. Analysts widely expect the central bank to leave its policy rate unchanged.

Highlights

  • Indonesian 10-year benchmark yields slips 4.7 basis points to 6.626%;
  • Effect of the Philippine central bank’s rate hikes since 2022 “quite significant” — senior central bank official;
  • Thai PM: ‘digital wallet’ handout scheme may be delayed;
  • China’s Shanghai Composite Index down 0.5%.















Asia stock indexes and currencies at 0432 GMT



















































































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