Most Asian currencies declined on Friday, despite a fall in the dollar and US bond yields, after hawkish comments by some Federal Reserve officials tempered expectations of impending US rate cuts and dented risk sentiment.
Almost all Asian currencies were set for weekly declines as the dollar strengthened due to resilient US economic data.
On Friday, the South Korean won, which eased 0.5%, was the region’s top laggard.
The Thai baht declined 0.3%, standing at its lowest level since Oct. 10.
The Philippine peso fell 0.4%, touching a five-month low.
Earlier on Friday, data showed Philippine annual inflation came in at 3.7% in March due to higher food prices, within the central bank’s 3.4% to 4.2% forecast for the month.
The Bangko Sentral ng Pilipinas (BSP) will meet on Monday for a monetary policy decision, kicking off a new round of Asian central bank meetings this month.
A Reuters poll suggests the BSP will keep its key rates on hold until at least the third quarter.
A slide in US Treasury yields on Thursday did not lift assets in Asia, as several Fed officials struck a cautious tone on easing monetary policy.
The benchmark 10-year bond yield was last at 4.3134%.
Asian currencies struggle for direction, shares fall; US CPI eyed
Softer US Treasury yields should not be mistaken for emerging market asset and currency buoyancy, according to Mizuho’s head of Asia economics and strategy Vishnu Varathan.
“Quite the opposite given the conspiracy of hawkish Fed and geo-political threat,” he said.
The US dollar index was last largely unchanged at 104.18, but “due for some near-term consolidation,” according to Barclays analysts. In equities, the Philippine benchmark index skid 0.4% to its lowest level in nearly two months. Stocks in South Korea and Singapore dropped 0.8% and 0.7%, respectively.
In Indonesia, shares advanced 0.3%.
The rupiah was last up 0.1%, hovering under the 15,900 mark against the dollar.
Short positions on the Indonesian rupiah strengthened to their highest since Nov. 2 on account of a sturdy dollar and uncertainty surrounding the timing of U.S rate cuts, a Reuters poll showed on Thursday.
Barclays analysts said they expected Bank Indonesia (BI) to hike its policy rate by 25 basis points to 6.25% if the rupiah’s recent move toward the psychologically important 16,000-per-dollar level was sustained all the way through to the next policy meeting on April 24.
The Reserve Bank of India is due to announce its policy rate later on Friday.
Markets in China and Taiwan were closed for public holidays.
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