BENGALURU: Most Asian emerging market currencies and equities gained on Wednesday as dovish remarks by Federal Reserve officials undermined the dollar and drove US Treasury yields down.
The Thai baht and the Taiwan dollar gained 0.3% each while the South Korean won advanced 0.2%. The three currencies are trading at their highest levels since late September.
Asian currencies benefited from an easing dollar, hovering near a two week low, which slid after recent comments from US Federal Reserve officials signalled that the central bank might not have to raise interest rate again.
The remarks and the accompanying pullback in US Treasury yields are the major recent factors for markets, Christopher Wong, FX strategist at OCBC said.
All eyes are now on the minutes of the Fed’s September policy meeting due later in the day as well as inflation data for September on Thursday which will provide further clues on the rate outlook.
On the whole, financial markets continued to keep a close watch on the conflict in the Middle East and the price of oil. High oil prices could create additional inflationary concerns for net oil importing countries such as India, Indonesia and Thailand.
The Israeli shekel was trading largely unchanged at 3.9395 per US dollar.
Minutes of Thailand central bank’s September policy meeting showed that financial conditions in the country have tightened but were still supportive of an ongoing economic recovery.
The Indonesian rupiah and the Philippine peso advanced around 0.2% each.
The rupiah, which has retreated 0.9% so far this year after holding gains for much of 2023, has caught attention of the central bank which said that it is “always in the market” to defend the currency after it fell 0.3% on Tuesday.
Equities in Asia advanced with shares in Seoul rising 2.5% to hit their highest level since Sept. 27 while those in Jakarta jumped 0.4% to their strongest level since Oct. 3. Shares in Taiwan rose 0.9% to hit their highest level since Sept. 19.
Over in India, traders are awaiting the September inflation data on Thursday where retail inflation is seen easing on moderating food rice rises and government subsidies, according to a Reuters poll.
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