Most Asian currencies and equities eased on Wednesday paring gains clocked in the recent run-up, as investors exercised caution around their expectations of a potential end to US rate hikes after minutes of the Federal Reserve’s last meeting.
Leading losses, the Indonesian rupiah gave up as much as 0.98%, to mark its biggest single-day percentage decline since Sept. 28.
The Malaysian ringgit followed suit to depreciate as much as 0.39%, on track for its worst session since Nov. 16.
The ringgit has lost over 2% in value so far this month, on track to snap from a 3-month winning streak, while the rupiah has also lost nearly 2%, set to end four straight months of gains.
“I think it is a retracement along a down-trend for Asia FX, given the consolidation in US 10-year yields.
Going forward, the recovery for Asia FX is also likely to be a non-linear process,“ said Nicholas Chia, macro strategist at Standard Chartered.
Indonesia’s central bank on Tuesday sold $236.5 million worth of new securities denominated in US dollars, higher than the target of $200 million, in a move aimed at attracting capital inflows.
“On Indonesian rupiah, the global risk appetite remains intact, evidenced by the over-subscribed SVBI auction yesterday … today’s slump suggest it is likely idiosyncratic factors relating to onshore dollar demand that is causing the IDR weakness,” Chia added.
Asian currencies, stocks largely up
Volumes are likely to be low through the rest of the week with Thursday’s Thanksgiving holiday in the United States.
The Federal Reserve released minutes from that meeting overnight though traders judged that policymakers’ promise to “proceed carefully” from here was not new information.
Fed officials agreed they would only raise interest rates if progress in controlling inflation faltered, reiterating recent comments by policymakers that left the door open for more tightening even as markets have moved to price in cuts from early next year.
The dollar index on the other hand was largely flat, though it held around 2-1/2-month lows after minutes of the Federal Reserve’s last meeting did little to change market expectations that its monetary tightening cycle was over.
Back in Asia, Singapore’s economy grew faster than initial estimates in the third quarter, helped by a resurgence in tourism and service sector activity, although authorities warned of risks to the outlook from inflation and geopolitics.
The Singapore dollar was largely unchanged with equities in the region eking out a gain of 0.3%.
Equities in Southeast Asia traded mixed; shares in Mumbai , Manila, and Seoul adding between 0.1% and 0.4%.
Those in Bangkok, Jakarta and Kuala Lumpur retreated between 0.5% and 1%.
In Argentina, the black market peso plummeted while its equities and bonds surged on Tuesday as local markets reopened for the first session after President-elect Javier Milei’s win.
The Taiwanese dollar dipped 0.1%, snapping a seven-day winning streak, while equities in Taipei slipped 0.7%.
The country’s Kuomintang and Taiwan People’s Party’s progress on a joint presidential bid last week helped the local unit clock solid gains, however, news of subsequent disagreements between the two parties have cast doubt on their coalition.
Comments
Comments are closed.