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Asian currencies rallied on Wednesday, with the Malaysia ringgit hitting a more than three-year high as China’s central bank cut its medium-term loan rate a day after Beijing’s broad policy easing measures to boost a weak economy.

Regional shares also rose, with the MSCI’s broadest index of Asia-Pacific shares outside Japan jumping as much as 1.4% to its highest level since late February 2022, while the broad MSCI emerging markets currency index added as much as 0.3% to a record high.

The ringgit, the best-performing currency so far this year, appreciated as much as 0.7% against the US dollar to 4.12 per dollar, its highest since June 11, 2021.

Shanghai stocks gained 1.7%, while the yuan edged 0.2% higher. The People’s Bank of China followed its wide-ranging policy easing announcement on Tuesday with a cut in medium-term lending rates to banks on Wednesday.

Beijing’s broad-based stimulus - the biggest since the pandemic - also included steps to boost China’s stock market and support the ailing property sector.

“We see the measures as positive, indicating that policymakers are increasingly concerned about weakness in the economy and markets,” analysts at Morgan Stanley said.

Ringgit’s lead was closely followed by the Indonesian rupiah and Philippine peso, which were up 0.6% each.

Currencies rise, ringgit at 19-month high ahead of Fed decision

Bank Indonesia will cut interest rates twice more this year after last week’s surprise reduction, a Reuters poll of economists predicted, as a stronger rupiah and subdued inflation allow the central bank to focus on supporting growth.

Meanwhile, Philippine Finance Secretary Ralph Recto, who has a seat on the central bank’s monetary board, said on Tuesday the monetary authority can afford to slash interest rates further to even match the Fed’s rate cut size.

“A combination of further gains in the yuan, growth in the region looking fine, Fed easing cycle and softer dollar should continue to benefit Asian currencies,” said Christopher Wong, currency strategist at OCBC.

Bangkok stocks edged 0.1% higher while the baht was flat. The country’s government will discuss the strong baht and the inflation target range with the Bank of Thailand next week, as the government pushes for a rate reduction.

The Taiwan dollar strengthened 0.4%, while local stocks jumped 1.3% to their highest since mid-July.

Equities in Indonesia and Philippines dropped 1.2% and 0.7%, respectively.

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