BENGALURU: Several currencies in emerging Asia extended losses on Wednesday to hit multi-month lows, while stocks were broadly mixed, as the greenback gained momentum following strong US economic data.
The South Korean won, one of the worst performers among Asian currencies for the year to date, slipped 0.6% to its lowest since Nov. 1. The Taiwanese dollar fell 0.3%, hitting its lowest level since Nov. 16.
Indonesia’s rupiah lost 0.4%, dropping to its lowest in nearly five months.
The US dollar, which measures the strength of the greenback against six major currencies, appreciated 0.1% to 104.360 on the back of stronger-than-expected orders for long-lasting US manufactured goods and concerns that hot inflation numbers could cause a rethink in the Federal Reserve’s rate-cut outlook.
The Fed’s preferred inflation indicator, the Personal Consumption Expenditures Price Index (PCE), and public comments from Fed Chair Jerome Powell are due on Friday. The index is expected to have risen 0.4% in the last month.
“The Fed’s decision to uphold three rate cuts in the dot plot for 2024 seemed to contradict the prevailing economic indicators, notably the above-forecast inflation data for January and February,” said Luca Santos, currency analyst at ACY Securities.
The Hong Kong’s Hang Seng and mainland Chinese blue chips lost 0.8% and 0.4% respectively, reversing gains from the previous session.
The stronger dollar had China’s yuan down 0.2% at 7.2276 per dollar and close to a four-month low, even after the central bank signalled support with a firm setting of its daily trading band.
The yuan’s weakness, which reflects sluggish economic growth in the world’s second-largest economy, has “led to some softness in regional currencies,” Saktiandi Supaat, head of FX research at Maybank said.
Singapore’s shares index, among the worst performers in Asia markets so far this year, rose as much as 0.9%, a day after recording a sharp jump in industrial production for February. The index was at its highest level since Sept. 19.
“Overall these numbers are in line with the regional recovery in exports and manufacturing we see across Asia, including out of Korea and Taiwan,” MUFG analysts said in a note to clients.
Stocks in Malaysia and Indonesia dipped 0.3% each, while Thailand’s and Taiwan’s benchmark indexes advanced 0.4% each.
In Japan, the yen plunged to a 34-year low against the dollar, last down 0.1%, prompting a strong intervention warning by the government.
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