BENGALURU: Emerging Asian currencies edged up on Thursday, as US-China trade tensions and expectations of interest rate cuts by the Federal Reserve subdued the dollar, while regional equities advanced, with Taiwan and South Korea shares reaching record highs.
South Korean won rose 0.3 percent and Malaysia’s ringgit inched up 0.1 percent.
The US dollar index was down 0.2 percent, as continuing trade friction between the US and China dampened sentiment.
US Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent on Wednesday blasted
China’s expansion of rare earth export controls. China’s commerce ministry defended the controls and called US criticism hypocritical.
“There are risks that the US and China could decouple further, but Greer/Bessent’s repeated rhetoric on how the Trump-Xi meeting will go on, mention of an extension of the trade truce suggest that the Trump team is unwilling to escalate tensions even further. That suggests a potential backstop for a complete fall-out in the near-term,” Maybank analysts said in a client note.
Investors’ increasing confidence in the Fed to cut rates at its next two policy meetings also weighed on the greenback.
Maybank analysts expect the dollar to remain subdued in the near term as political shifts impact the yen and euro and regional central banks intervene to prop up local currencies.
China’s yuan firmed to a two-week high after the central bank set its strongest daily midpoint in a year.
The Indian rupee rose 0.2 percent, extending Wednesday’s 0.8 percent gain.
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