Asian FX, stocks rebound on weaker dollar, China stimulus bets

The Thai baht and the South Korean won appreciated against a broadly weaker US dollar, while most regional equities advanced on Friday, helped by rising bets of more economic stimulus from China.

The Thai baht and South Korean won led the gains, appreciating 0.3% and 0.4% respectively.

Elsewhere, the Malaysian ringgit rose 0.2% against the dollar, while the Singapore dollar and Chinese yuan dropped 0.1% and 0.2% respectively.

Singapore’s annual exports fell for an eight consecutive month in May, raising the risk of recession in the trade-reliant economy as global growth weakens.

Equities in the region were mostly mixed.

Singapore stocks were up 0.6%, despite data showing Singapore’s annual exports fell for an eight consecutive month in May, raising the risk of recession in the trade-reliant economy as global growth weakens.

Share markets in China gained 0.4%, taking heart from the People’s Bank of China lowering interest rates this week and expectations of more stiumulus to come to help the economy recover.

Thai baht climbs as Asian currencies gain on weak US dollar

Equities in South Korea gained 0.5%, tracking a better performing Wall Street.

Next week, central banks in the Philippines and Indonesia meet to decide on their monetary policy stance. Analysts at ANZ expects both to stand pat.

“A steady build up of foreign exchange reserves should remain an important priority for Asian central banks this year,” said the ANZ analysts.

The dollar index against a basket of major currences last stood at 102.2, having dropped to a one-month low of 102.08 overnight, after the US Federal Reserve left interest rates unchanged, snapping a string of 10 consecutive rate hikes.

The Fed signalled that borrowing costs may still need to rise by as much as half of a percentage point by the end of this year, but a string of data out on Thursday had markets challenging that view, as economic activity in the United States slows and inflation cools.

The European Central Bank on Thursday raised its key cash rate to 3.5%, its highest in 22 years, and on Friday the Bank of Japan kept its interest rates unchanged, as expected, in order to support the economy’s weak recovery.