The South Korean won led gains among emerging Asian currencies on Friday, with stocks mixed, as US bonds were able to sustain a rally amid signs of falling inflation in the largest economy in the world.
The third-quarter GDP print from the US released on Thursday showed signs of resilience in the economy which might prompt the Federal Reserve to stop hiking interest rates in the short-term amid easing inflationary pressures.
The won advanced 0.6% for the day, underpinned by an “overnight fall in US yields,” according to Min Joo Kang, senior economist at ING Bank.
The currency was on course to snap three weeks of declines.
The Malaysian ringgit also added about 0.2%, but was on track for its ninth weekly loss.
Market watchers are keenly awaiting personal consumer expenditure index data from the US, which the Federal Reserve also uses as an inflation gauge, later in the day which is seen growing 0.3% in September on a monthly basis.
South Korean won leads Asian FX higher, stocks mixed on rate fears
The benchmark 10-year US Treasury yields declined 0.1 because of weaker-than-expected US inflation and disposable income data.
It breached the 5% milestone on Monday for the first time in 16 years.
“With demand likely to slow and inflation softening even as long-term rates remain high, conditions are aligning for the Fed to go on a prolonged pause, in our view,” said DBS Bank analysts in a note.
The Philippines central bank raised its benchmark interest rate by 25 basis points to 6.5% in a widely-flagged offcycle move on Thursday, while also warning that inflation remained above its target level.
The Philippine peso added 0.2%.
Stocks in Manila, however, fell 0.8%, and were on course for its worst session since Oct. 17, 2022.
“Moreover, the peso has also been under pressure since July, nudging policymakers to prioritise financial stability.”
The offcycle hike followed a surprise interest rate hike decision by Bank Indonesia last week, as rising US interest rates and higher inflation make it hard for Asian monetary authorities to deliver easing.
The Indonesian rupiah edged 0.2% lower.
Most stocks in emerging Asia rose, with those in India , Jakarta and Taipei rising between 0.4% and 0.7%. Shares in Beijing rose 0.4%, while gaining 0.5% in the week.
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