BENGALURU: Most Asian currencies and stocks held their ground on Friday ahead of key US inflation data, but were on track to end the first half of the year deep in the red, pressured by the Federal Reserve’s frustratingly slow shift to lower rates.
The Thai baht, South Korean won, Indonesian rupiah and the Philippine peso were among the worst performing currencies among emerging Asian markets, weakening between 5% and 7% in the first half.
“While a firm US dollar and domestic (Thai) politics serve as near-term headwinds for the currency, we retain our sanguine outlook for the Thai baht in the later part of this year,” analysts at MUFG said in a client note.
A slew of court cases against Thai politicians, including incumbent prime minister Srettha Thavisin, has put domestic politics and financial markets on edge, creating uncertainty in the Southeast Asia’s second-largest economy.
Other currencies such as the Singapore dollar and the Malaysian ringgit also declined by 2.9% and 2.7%, respectively, in the first half of 2024.
In contrast, the Indian rupee was the top performer in the region, receding only marginally so far this year, helped by improving economic fundamentals and foreign inflows.
“Growth has been healthy in India, is likely to continue to flourish and inflation is also within target, so the RBI (Reserve Bank of India) is in no hurry to slash rates to be more growth supportive,” analysts at Maybank wrote.
“This view is supported by India’s bond inclusion into JP Morgan EM Index starting today, which will attract billions of dollars in foreign inflows,” they said, adding that they expect a tight range of 83.00 to 84.00 rupee per dollar to hold.
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