The Malaysian ringgit led losses among emerging Asian currencies and stock markets retreated on Friday, as US Treasury yields surged after the Federal Reserve chair said officials were “not confident” interest rates were high enough to defeat inflation.
The ringgit fell 0.6% against the dollar and was on track for its fourth straight session of losses.
The benchmark index for the Kuala Lumpur stock market slipped 0.3%.
“The strength in the US yields and hawkish comments from Fed chair Jerome Powell are contributing to the easing of major Asian currencies including the Malaysian ringgit,” said Christopher Wong, FX strategist at OCBC.
The ringgit decline erased the 3% gain logged between Nov. 1 and Nov. 6, though the currency was holding onto a 0.15% rise for the week.
Stocks in South Korea slumped 1%, while those in Singapore, the Philippines and Taiwan dropped as much as 0.7%. The South Korean won eased as well, weakening 0.5% against the US dollar.
“The won was initially supported by weekend news that Korea reimposed a full ban on equity short selling, which drove a sharp KOSPI rally on Monday,” said Chang Wei Liang, FX and credit strategist at DBS Group Research.
Following the strong rebound in the greenback, Chang predicts the USD-KRW pair to consolidate at around 1,320-1,340 for now.
Thai baht, Malaysian ringgit lead Asian FX lower on extended dollar strength
The won was trading at 1,316.0 per dollar as of 0310 GMT.
The Philippine central bank is set to meet on Nov. 16 to decide on its cash rate. Analysts at Citi expect the Bangko Sentral ng Pilipinas (BSP) to hike interest rate by a quarter-point.
The Indonesian rupiah dropped 0.2% against the greenback while stocks in Jakarta fell 1%.
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