SINGAPORE: Most emerging Asian stocks and currencies were set for weekly gains on Friday, buoyed by strong risk appetite after a super-sized interest rate cut from the US Federal Reserve.
Singapore’s benchmark share index continued to trade at a six-year high and was set for its sixth consecutive weekly gain. The Singaporean dollar was set for its best week in a month.
Malaysia’s ringgit, Asia’s best performing currency this year, rose 0.5% to its highest level since March 2022 and was set for its best week since late-July.
“The Fed has delivered a boost to EM and broader risk assets, and we expect further gains in the near term,” Barclays analysts said in a note.
The Fed’s 50-basis-point rate cut on Wednesday and smaller-than-expected weekly jobless claims data on Thursday sparked optimism that the US economy could achieve a soft landing.
Barclays, however, expects the Fed cut to have little impact on the monetary policy paths of central banks in India, Malaysia, Thailand and Singapore, who will likely continue to hold rates due to inflation or financial-stability constraints.
Thailand need not reduce rates immediately after the Fed as its economic outlook remains unchanged, its central bank chief said.
The country’s key interest rate has been at a decade-high of 2.50% for a year but the Bank of Thailand has resisted repeated government calls for a cut.
Thai equities traded at 11-month highs and the baht was set for its ninth straight weekly gain, the longest such streak since June 2020.
In the Philippines, the peso and stocks pared gains after the central bank said it will reduce reserve requirements for banks by 250 bps, adding that the inflation outlook meant further cuts were possible.
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