BENGALURU: Most Asian currencies moved in a narrow range on Friday but were set for monthly gains, while shares rose as investors awaited a key US inflation reading for clues on global interest rates.
Thailand’s baht and the Taiwan dollar were poised for their first monthly rises since the start of the year, while the Indonesian rupiah was set to record its first monthly gain since February.
Other currencies such as the Singapore dollar and Malaysia’s ringgit were also set to post monthly rises.
On Friday, the Taiwan dollar, Thai baht and Malaysian ringgit and the South Korean won traded flat to lower.
The Indonesian rupiah and the Philippine peso hardly moved during the day.
Indonesia’s central bank said it was monitoring the foreign exchange market to balance supply-demand dynamics for the greenback and maintain market confidence.
The U.S personal consumption expenditures reading due later in the day is the main focus of traders looking for guidance on the outlook for policy rates.
In Asia, traders are bracing for a deluge of inflation data next week from Thailand, the Philippines, Taiwan, Indonesia and South Korea to gauge how their respective central banks would react to control price pressures.
“Headline inflation across most of Emerging Asia is now either below or only slightly above central bank targets. Nevertheless, policymakers have struck a slightly more hawkish tone recently due to concerns about currency weakness,” Capital Economics analysts said.
“We think that weaker growth and demand-side inflationary pressure... will create the conditions for most central banks to cut interest rates before the end of the year.”
Investors are also awaiting election results from India, South Africa and Mexico next week that could move markets.
“As we await more US data, EM local and FX markets will likely trade to the tune of idiosyncratic factors in the near term,” Barclays analysts said in a note.
In stock markets, shares in Seoul, Manila and Singapore rose between 0.1% and 1%, while those in Jakarta and Taipei fell 0.7% and 0.9%, respectively
However, Indonesian stocks were set for their worst month in a year and Philippine stocks were poised for their biggest monthly fall since last October.
Chinese stocks reversed early gains after a survey showed a fall in May manufacturing activity, which kept the call for additional fiscal stimulus afloat. They closed 0.2% down.
In Japan, inflation accelerated in May but price growth excluding the effects of fuel eased, heightening uncertainty on the timing of the central bank’s next interest rate hike.
Japan signalled again that it would take action against excessive currency movement, ahead of the release of data showing whether the country spent money in the foreign exchange market in late April and May.
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