S Korean won, Taiwan dollar lead Asian FX lower

BENGALURU: The South Korean won and the Taiwan dollar started December on a weak note on Friday, after the US dollar steadied on commentary from Federal Reserve officials which pushed back market expectations on a quick pivot to rate cuts.

The South Korean won depreciated nearly 1.2%, marking its worst day since early April, while Taiwan’s unit dropped about 0.7%, posting its worst intra-day session since March.

Data overnight showed that US personal consumption expenditures price index moderated in October, while inflation in Europe also cooled, leading to expectations that their respective central banks are likely to stop hiking rates further.

However, some Fed officials cautioned that it was “too early to know” if the US central bank was finished with rate increases, which pushed the dollar higher.

The dollar index was at 103.34 as at 0700 GMT after having risen more than 0.5% overnight.

“However, we expect this rebound as a whole to be short-lived and that the greenback should move back down again in December amid a seasonally weak period,” analysts at Maybank said.

Other Asian currencies such as the Malaysian ringgit, Philippine peso, Vietnamese dong and the Singapore dollar traded flat to down 0.5%.

Also, the Indian rupee flat even after the country’s economic growth for the July-September quarter beat market estimates.

The Indonesian rupiah reversed early losses to tick marginally higher. Inflation picked up in the country but stayed within the central bank’s target range, even as the central bank governor warned that inflation could pick up again next year.

“The anticipated pickup in price pressures next year will likely prevent Bank Indonesia from cutting rates early with the policy rate likely untouched until the second half of the year,” analysts from ING noted.

Separately, Taiwan, Thailand, Philippines and South Korea are set to release inflation data next week, which could provide further clues on how their respective central banks could react in terms of policy rates.

Central banks in South Korea and Thailand had stood pat on their rates earlier this week. Moreover, the Reserve Bank of India is expected to hold off hiking its interest rates as well.

The Thai baht was a notable outlier, rising as much as 0.5%, after the currency lost as much as 1.1% on Thursday.

Among Asian equities, shares in Seoul and Jakarta fell 1.2% and 0.5%, while stocks in Manila, Singapore and Mumbai rose between 0.3% and 0.7%.