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Markets

Asia's FX steady as traders hold off bets ahead of US inflation report

  • Singapore stocks trimmed earlier losses that were largely in real estate firms and banks.
Published June 8, 2021

Asia's emerging market currencies largely held steady on Tuesday, as traders adopted a cautious approach ahead of US inflation data this week for clues on the Federal Reserve's tapering timeline.

Stock markets, on the other hand, were a mixed bag with Indonesian shares falling 0.8% on concerns over a spike in COVID-19 cases in some parts of the country, while Malaysian and Philippine shares rose around 0.5%.

Malaysian markets were closed on Monday for a public holiday.

Investors are keeping a close watch on US inflation data due on Thursday, following on from last week's payrolls report which tempered expectations of any near-term moves by the Fed to tighten policy.

"There is some respite for EM assets as taper fears get pushed back," Eugene Leow, a rates strategist at DBS, said in a note.

"We reckon investors are still torn between chasing higher returns while keeping an eye on when the Fed's stance would change. An uncomfortable carry environment is likely ongoing as complacency on low USD rates seep in."

The ringgit advanced 0.2%, while the Philippine peso and South Korean won weakened.

The rupiah, favoured by foreign investors looking at Indonesia's high-yielding debt, held steady even as stocks dropped.

Bank Indonesia data showed foreign exchange reserves fell by $2.4 billion in May amid capital outflows.

Indonesian authorities have drafted in more doctors and nurses to two areas on the islands of Java and Madura after hospitals there approached full capacity, raising worries of a potentially broader spike in cases that has hit other Asian countries in recent weeks.

Singapore stocks trimmed earlier losses that were largely in real estate firms and banks.

The city-state, a low-tax jurisdiction, will change its tax system as needed, its finance minister said after a group of seven advanced economies agreed to a mininum global corporate rate.

Singapore is home to a number a global multinational firms' regional headquarters, including several tech giants.

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