BENGALURU: Emerging Asian currencies were set to post weekly declines on Friday on the greenback’s strength as prospects of higher-for-longer interest rates hurt risk sentiment, while markets awaited US jobs data to assess the country’s monetary policy outlook.
The Thai baht and Indonesian rupiah were both set for a fifth straight week of losses, while the Malaysian ringgit was on track for a sixth consecutive weekly fall.
The dollar index, which earlier in the week hit a roughly 11-month high, was on track for 12 straight weeks of gains, putting pressure on Asian currencies as investors moved away from riskier assets.
The week was also marked by a broad selloff in world government bonds, which drove up US 30-year Treasury yields to 5% for the first time since 2007, fanning worries of a global slowdown.
“Large swings in core rates and oil prices continue to dominate the narrative for EM assets,” analysts at Barclays said, adding prevailing uncertainties are likely to cap risk appetite, despite some recent stabilization in sentiment.
The Philippine peso was the only outlier, set to rise 0.2% for the week, its third weekly gain, but analysts said they doubt there is much room left for the peso climb.
“We believe that further climbs in the pair would be more limited given the BSP’s (Bangko Sentral ng Pilipinas) hawkishness and the increasing likelihood of another hike,” analysts at Maybank said.
Meanwhile, most Asian stock indexes rose on Friday amid expectations of a decline in US non-farm payrolls data, which could ease pressure on the Federal Reserve to keep rates higher for a longer period.
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