BENGALURU: Most Asian currencies weakened on Tuesday while stocks also extended losses ahead of key US and regional economic data this week which could provide clues about interest rate outlooks from the Fed and other central banks.
Singapore shares fell as much as 1.1% to their lowest since Feb. 14, while Taiwan stocks lost as much as 1%.
Indonesian stocks lost up to 0.4%, on track for their fifth consecutive session of losses, and Philippine shares retreated 0.6%.
Regional currencies failed to register substantial movement as the dollar stood largely flat ahead of key US economic data that could provide more information on the Federal Reserve’s rate-cut timings.
The Indonesian rupiah and the Philippine peso inched 0.1% and 0.2% lower, respectively.
The US core personal consumption expenditures (PCE) price index - the Federal Reserve’s preferred measure of inflation - is due on Thursday, where expectations are for a 0.4% increase on a monthly basis.
Markets have already ruled out a cut at the Fed’s March meeting and have recently pushed back hopes for a cut from May to June.
In Asia, inflation data from Indonesia and Thailand are due on Friday.
Data last week showed that inflation accelerated less than expected in January in Malaysia and Singapore.
The easing inflation trend has given central banks some leeway but investor focus remains on the timing of further rate cuts. The central banks of Indonesia and South Korea left their policy rates unchanged last week.
“While inflation is coming off, in most of the region’s economies it has either just reached the target range or is still closing the gap to target range,” analysts at Morgan Stanley wrote.
Asian currencies have remained on the weaker side against the US dollar, and “the potential for further depreciation could still impart some further upside to inflation and may mean inflation does not durably stay within target, holding back rate cuts,” the analysts added.
Meanwhile, the focus remains on the Malaysian ringgit , which is trading near lows last seen in January 1998 and which has lost nearly 4% of its value so far this year.
The Malaysian central bank has said that the ringgit is undervalued and should be trading higher on account of positive economic fundamentals and prospects.
Bank Negara Malaysia (BNM) Governor Abdul Rasheed Ghaffour also said the central bank had stepped up engagements with government-linked companies, corporations and investors to encourage continuous flows into the foreign exchange market.
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