Most Asian currencies were heading for weekly declines on Friday, although largely unchanged, while stocks were higher on optimism about US rate cuts stirred by fresh signs of a cooling labour market.
Regional forex markets lost the ground they gained last week when the dollar weakened from the US Federal Reserve’s dovish shift following softer-than-expected jobs data for April.
The Philippine peso inched up 0.1%, but was on course for a weekly decline of 0.3%, having gained nearly 1% last week. The South Korean won gained 0.1%, but was on track for a weekly fall of 0.5% after two weeks of gains.
The Malaysian ringgit was largely flat this week, as it pared last week’s climb of 0.6%.
The central bank kept its interest rate unchanged on Thursday, saying the ringgit’s weak performance did not reflect economic fundamentals.
Although the ringgit has stabilised over the past month from earlier hovering around its 20-year lows, but is still down 3.1% this year.
Asian currencies fall on firm dollar
“We reckon that Bank Negara Malaysia likely drew some comfort from the Malaysian ringgit’s regional outperformance over the past month, despite external-driven volatility,” analysts at DBS Bank said, referring to the central bank.
Among other currencies, the Singapore dollar lost 0.1%, set for its worst week since early April with a fall of 0.3%. It rose 1% in the prior week.
The Taiwanese dollar was slightly lower on Friday but was poised for a fourth consecutive weekly fall.
Stocks in the region were higher after Thursday’s data showed greater than expected US initial claims for state unemployment benefits for the week ended May 4, reinforcing prospects for rate cuts after the Fed’s dovish tilt last week.
Traders are now pricing in two rate cuts of 25 basis points this year versus one before the payrolls data.
South Korean stocks led the gains in emerging Asian equities with a jump of 1.2%, while Singapore stocks rose as much as 1%.
Stocks in Taiwan gained 0.7%, while Manila shares were up 0.9%.
Malaysian stocks were largely unchanged, while equities in Thailand inched down 0.2%, bucking the regional trend.
Financial markets in Indonesia were closed for a public holiday.
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