BENGALURU: Most emerging Asian currencies flitted in narrow ranges on Wednesday as the US dollar ticked higher, while most stock markets rose, with traders focussed on the magnitude of the Federal Reserve’s widely anticipated interest rate cut next month.
The dollar index rose about 0.2% to 100.82 at 0740 GMT, hovering near a 13-month low, as markets weighed up the likelihood of a 50-basis-point US rate cut, rather than the more widely expected 25-bps cut.
“Some profit—taking on USD shorts is seen today ahead of major tech earnings,” said Chris Wong, OCBC currency strategist.
“I expect the dollar to remain a ‘sell-on-rally’ as the Fed cut amidst a goldilocks setting should provide a sweet spot for pro-cyclical currencies, including the South Korean won and Asian FX to recover.”
In Asia, the Thai baht fell nearly 0.3%, while the Singapore dollar, Malaysian ringgit and Indian rupee traded between flat and 0.3% lower
The South Korean won ended 0.6% lower, while Seoul stocks closed flat.
Tech-heavy benchmarks such as in South Korea and Taiwan treaded with caution ahead of US chip giant Nvidia’s quarterly earnings due after US market hours.
Most other stock markets rose, with India hitting an all-time high on optimism that US rate cuts will boost IT stocks and also help reroute foreign inflows into the emerging market.
Among others, Jakarta and Taipei gained 0.8% each.
Kuala Lumpur stocks jumped as much as 1.8% to their highest since mid-December 2020, led by financial stocks. Malayan Banking gained 1.9% after reporting a rise in quarterly profit.
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