BENGALURU: Asian currencies struggled for a clear direction on Thursday as investors assessed signals from the US Federal Reserve that it will not cut rates in March, while the Indonesian rupiah traded flat after inflation came within expectations.
The dollar strengthened overnight after Fed Chair Jerome Powell pushed back on the idea of a US interest rate cut as soon as March, with investors now pricing in the prospect of the central bank to deliver its first cut in its May 1 meeting.
At 0700 GMT, the dollar index - the greenback’s measure against six major rivals - was at 103.69, near a seven-week high.
“Fed’s rate-cut uncertainty could remain the key factor to affect Asian assets over the near term. I think it’s hard to be quite bullish on Asian assets, which could move sideways,” said Poon Panichpibool, a markets strategist with Krungthai Bank.
The Taiwan dollar and the yuan dipped more than 0.1% each, while the Singapore dollar traded marginally lower.
The Indonesian rupiah reversed gains to trade flat, while stocks were up 0.2%, after price pressures came in line with analysts’ forecast and within the central bank’s range of 1.5% to 3.5%. “On inflation, policymakers appear clearly more comfortable compared with a few months ago. Headline inflation of around 2.5% this year is seen as manageable,” analysts from Bank of America wrote.
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