Asian currencies mostly edged higher on Friday, though the Malaysian ringgit weakened ahead of monthly inflation data, after US President Joe Biden and his Republican counterpart appeared close to reaching a deal to raise the government’s debt ceiling.
The Malaysian ringgit was the top laggard among peers, depreciating 0.2%, while its domestic bourse appeared unmoved.
The ringgit was hovering at its lowest level since November 2022.
“The near-term upward momentum of dollar-ringgit is concerning and will continue due to domestic sentiment for holding MYR deteriorating rapidly which is also reflected in multi-year lows in trading volumes in the domestic stock market, analysts at RHB said in a note.
Asian currencies downcast, investors flock to dollar
Singapore is poised to release April industrial production figures later in the day with analysts at ING expecting a seventh straight month of contraction as industrial production tracks the downturn of non-oil domestic exports (NODX).
“Soft global demand is weighing on NODX which in turn has dragged down production. We can expect both NODX and industrial production to stay subdued in the near term which will likely translate to another soft GDP report for the second quarter,” said ING.
The Singapore dollar rose 0.1% while its local equities benchmark remained flat.
On Thursday, Singapore saw its economy contract in the first quarter, leaving the affluent city-state at risk of a technical recession in the event of another contraction in the current quarter.
Elsewhere in Asia, the Philippine peso lead gains among peers, appreciating 0.5%, while South Korean won , Indonesian rupiah stood pat.
Globally, risk-on sentiment kicked in after US President Joe Biden and top congressional Republican Kevin McCarthy appeared to be closing in on a deal that would raise the government’s $31.4 trillion debt ceiling for two years while capping spending on most items.
The US dollar held at a two-month high, as US data pointed to a resilient economy even after an aggressive rate hike cycle by the Federal Reserve.
Money markets are now pricing in a roughly 52% chance that the Federal Reserve will deliver another 25-basis-point rate hike at its policy meeting next month, as compared to a 36% chance a week ago, according to the CME FedWatch tool.
Stocks in Asia took mixed positions, with shares in Philippines and Thailand falling 0.8% and 0.3% respectively, while equities in South Korea and Taiwan edged higher.
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