BENGALURU: Asia's emerging currencies edged higher on Thursday as easing US Treasury yields nipped dollar gains, while central bank meetings in Indonesia and Malaysia will be watched for commentary ahead of the key Federal Reserve meeting next week.
In contrast to the global move toward tighter monetary policy, China cut its mortgage reference rate for the first time in nearly two years as economic data this week showed further weakening in consumption and the troubled property sector.
Central bank meetings in Indonesia and Malaysia are not expected to see any policy changes but come after US Treasury yields have jumped this month as investors raise bets that the Fed will have to act more aggressively to tighten monetary policy to stem out-of-control inflation.
The rupiah and ringgit both edged 0.1% higher. Stocks in Jakarta were up half a percent, while in Kuala Lumpur they dipped 0.1%.
Thai baht gains on quarantine-free travel hopes; Asia FX gains
In Indonesia, with some of the highest-yielding debt in emerging markets, the central bank will come under pressure to kick off its own tightening cycle to avert currency weakness and potential large capital outflows if the Fed starts to signal a faster pace of rate hikes.
"We expect the policy commentary to highlight growth risks to reinforce the pause on the benchmark rate at 3.5% but lay the ground for a gradual shift towards 'pro-stability' to anchor rupiah (and bonds), by securing real yield differentials," said Radhika Rao, a senior economist at DBS.
Reuters polls found economists expect both Bank Negara Malaysia and Bank Indonesia to wait until the second half to start raising rates.
Elsewhere, Asia's emerging stock markets were largely flat to higher, taking a breather from rising US yields.
Shares in Seoul look set to end a five-day run of losses, though gains were capped at 0.4%.
Public subscriptions for the mega-$10.8 billion IPO of LG Energy Solutions ended on Wednesday, with investors bidding for a record 114 trillion won worth of shares, potentially reducing volatility in the market.
In Singapore, stocks continued to hover around 2019 highs. The city-state will also see its first special purpose acquisition company (SPAC) listing on Thursday when Vertex Venture Holdings, a Temasek subsidiary, begins trading in the afternoon.
Highlights:
** Indonesian 10-year benchmark yields up 1.3 basis points at 6.427%??
** Malaysia's 10-year benchmark yield up 0.70 basis points at 3.74%
** Singapore makes bold foray into SPAC market, Temasek-backed firm lists on Thursday
Comments
Comments are closed.