Most Asian currencies firmed modestly against the US dollar on Thursday, with the South Korean won and the Thai baht taking the lead, and Singapore's dollar appreciating slightly after the central bank unexpectedly tightened monetary policy.
The Singapore dollar firmed 0.3% to hit a three-week high after the Monetary Authority of Singapore (MAS) tightened policy for the first time since October 2018 as the threat of inflation outweighed growth risks posed by the coronavirus.
The MAS, which manages its policy via exchange rate settings rather than interest rates, letting the local dollar rise or fall within an undisclosed band, slightly raised the slope of the policy band on Thursday from zero percent previously.
"The MAS anticipates concurrent build-up in inflationary pressures as demand recovery conspires with capacity/supply-chain kinks and higher cost-push," analysts at Mizuho Bank said in a note.
"Whilst recovery thus far has fallen short of levels consistent with past Singapore dollar slope reinstatement, a backdrop of growing inflation risks in quarters ahead, alongside adequate recovery, incentivise to pre-emptive normalization."
Meanwhile, preliminary data released separately showed Singapore's economy grew 6.5% in the third quarter, broadly in line with economists' forecast.
The US dollar index touched its lowest this week at 93.987 against major peers on Thursday after data showed US consumer prices increased solidly in September, affirming the view that normalisation by the Federal Reserve is imminent.
"The release of the Fed minutes has reaffirmed expectations that tapering may begin towards the end of the year in 'either mid-November or mid-December', Yeap Jun Rong, a market strategist at IG said. Elsewhere in Asia, Indonesia's rupiah firmed 0.4% to touch an over 5-month high, while equities jumped 1.4% to scale an over two-year high as the holiday island of Bali reopened to foreign tourists after 18 months of pandemic hiatus.
Indonesia, Southeast Asia's biggest economy and an exporter of thermal coal, is benefiting from a global energy crunch that is pushing coal prices to record highs due to a rise in consumption and supply disruptions.
South Korea's won and the Thai baht appreciated about half a percent each, and Malaysia's ringgit firmed modestly to hit a one-month high.
South Korean finance minister said on Thursday the government was ready to deploy measures to stabilize currency markets if needed, as the won records a more than 5% decline since July.
Among regional equities, the Philippine benchmark index advanced more than 1% after two straight sessions of losses, while Malaysian shares slipped half a percent after seven consecutive days of strong gains.
Highlights:
** Indonesian 10-year benchmark yields fall 3.7 basis points to 6.305%
** China's factory gate inflation hits record high in September
** Chinese property firms suffer fresh downgrades amid Evergrande crisis
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