BENGALURU: Emerging Asian currencies were steady on Wednesday and equities notched modest gains ahead of key US inflation data and the Federal Reserve’s rate decision, while the Bank of Thailand (BoT) left its key interest rate unchanged, as expected.
The Thai baht and equities in Bangkok remained largely unchanged after the central bank held its benchmark interest rate steady for the fourth consecutive meeting, defying public calls from the government to reduce borrowing costs.
Meanwhile, Thai courts will convene on a trio of politically charged cases next week, including one that could potentially lead to the prime minister’s dismissal.
“Prolonged political turmoil could delay the budget for FY2025, which could affect Thailand’s economic growth outlook as well,” said Poon Panichpibool, a markets strategist at Krung Thai Bank.
If that scenario materializes, it is possible that the BoT might have to provide some support to the economy via easing monetary policy with one-two rate cuts, he added.
Elsewhere, the South Korean won and the Malaysian ringgit inched up, while the Singaporean dollar and the Chinese yuan barely moved against the dollar.
Meanwhile, the Fed is expected to stand pat on its key interest rate later in the day, with traders pricing in a 52% chance of a cut in September, according to the CME FedWatch tool.
Investors are also awaiting the US inflation report, due at 1830 GMT.
Asian central banks have been on a wait-and-see mode as sticky inflation and a US tight labour market keep shifting expectations on when the Fed will cut rates and by how much.
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