BENGALURU: Most Asian currencies and equities rose on Thursday, buoyed by growing expectations that US rate cuts are on the table this year while focus shifted to an interest rate decision by Malaysia’s central bank.
The South Korean won climbed 0.3% while the Indonesian rupiah gained 0.2%. Equities in Taiwan rose as much as 1.5% to hit another new peak while stocks in Indonesia jumped 0.4%.
US Federal Reserve Chair Jerome Powell in his testimony to lawmakers on Wednesday said that rate reductions will “likely be appropriate” later this year, although he pointed out that progress on inflation “is not assured.”
Poon Panichpibool, a markets strategist at Krung Thai Bank said that as long as the market still believes that the Fed will cut rates three times or potentially four, that could support Asian currencies in the near term.
“However, the risk could be that if the US economic data remain strong or beat market expectations clearly ... I would expect another round of selling pressures on Asian FXs.”
Back in Asia, the focus remains on Bank Negara Malaysia’s (BNM) monetary policy meeting where it is widely expected to stand pat on rates.
“To curb further potential depreciation on MYR, it is possible that the BNM will maintain the policy rate as well as maintain their neutral tone, without providing any signal that they will cut the policy rate anytime soon,” Panichpibool said referring to the Malaysian ringgit.
Malaysia’s ringgit climbed 0.4% while equities rose 0.2%.
The ringgit has been recovering its losses after hitting a 26-year low in February, prompting the central bank to assure that the fall was largely due to external factors and did not reflect the positive prospects of the country’s economy. However, the currency is still down 2.6% for the year.
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