Most Asian currencies and equities were subdued on Monday, as investors placed cautious bets coming out of a holiday-extended weekend, with a stronger dollar on looming aggressive United States rate policy tightening further hurting sentiment.
Malaysian ringgit, Taiwan dollar and South Korea’s won eased about 0.3% each in the wake of the greenback’s rise on Thursday as more hawkish comments from Federal Reserve officials reinforced expectations for faster US policy tightening.
“Asian markets may tread carefully to start the week as investors digest the PBOC’s (People’s Bank of China) 25bps RRR cut,” OCBC analysts said in a note.
Late on Friday, the PBOC announced it would cut the amount of cash that banks must hold as reserves for the first time this year, releasing about 530 billion yuan ($83.25 billion) in long-term liquidity to cushion a potentially sharp slowdown in economic growth.
With the absence of market clues from Europe due to Easter holidays, investors will look at key economic data out of China on Monday.
Data showed that China’s economy grew at a faster-than-expected clip in the first quarter, expanding 4.8% year-on-year. But the risk of sharp slowdown over coming months has risen as sweeping COVID-19 curbs and the Ukraine war take a toll.
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Chinese stocks still dipped 0.8%, as market participants shrugged off the PBOC move as falling below their expectations, and possibly not enough to reverse economic slowdown.
“While China has eased monetary policy via the latest RRR cut, this will also not be a panacea to address the supply bottleneck,” an OCBC note said.
Meanwhile the Singaporean dollar and Philippines peso traded 0.2% lower.
The energy-linked Indian rupee fell 0.3%, its lowest levels since March 22, likely pressured by higher oil prices as concerns grew about tighter global supply, with the deepening crisis in Ukraine raising the prospect of heavier sanctions by the West on top exporter Russia.
Similarly, Thai baht and Indonesian rupiah were marginally down 0.1%.
Among equities markets, Singapore dropped 0.7%, touching its lowest levels since March 17, while Malaysia shares fell 0.3% for a third straight session.
Jakarta stocks were an outlier in the region, climbing 0.6%, lifted by higher energy prices and ahead of a central bank policy meeting on Tuesday where a rise in interest rates is expected as inflation risk rises.
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