BENGALURU: Most emerging Asian currencies were on the front foot on Tuesday, with the Philippine peso and South Korean won gaining the most as the dollar weakened, while investors looked forward to an inflation data for clues on the timing of US rate cuts.
Investors are focused on the US personal consumption expenditures reading, due on Friday, in a data-light week. This is likely to set the path for US interest rates, which Asian central banks are expected to follow.
Markets have significantly pared their bets on the number of rate cuts, pricing in 34 basis points of cuts compared with 150 bps at the start of the year, due to resilient economic data from the world’s largest economy. The push-back in the timing of rate cuts has hit sentiment for riskier Asian assets.
At 0645 GMT, the dollar index, which measures the strength of the greenback against six major currencies, fell 0.1% to 104.46.
“Trading FX has been difficult throughout 2023 and 2024. The constant disconnect between the wishes of Fed officials, the expectation of market participations and the realised US economic data have resulted in the broad dollar to largely remain range-bound between 100-105,” Bank of America analysts said in a research note.
Back in Asia, the Philippine peso and South Korean won led currencies higher, rising 0.5% and 0.4%, respectively.
Other currencies such as the Singapore dollar, Malaysian ringgit and the Taiwan dollar advanced as much as 0.2%.
The Indonesian rupiah fell 0.2%, while the Thailand baht, the Indian rupee and the Chinese yuan traded flat.
Thailand’s cabinet approved a plan to boost the 2024 fiscal budget by 122 billion baht ($3.34 billion) to help finance its delayed household stimulus scheme.
Among Asian equities, the Jakarta index advanced as much as 1.8% to 7,308.14 points and Singaporean stocks rose 0.4% to hit their highest since last August.
Taipei stocks closed at an all-time high, rising 0.3%, piggybacking on bullish sentiment over technology stocks.
Shares in Kuala Lumpur and Manila fell 0.1% and 1.1%, respectively, and dipped for a third straight session.
Elsewhere, Sri Lanka’s central bank stood pat on interest rates to keep price pressures in check, with the authorities looking to boost growth in the debt-laden nation.
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