Asian currencies: Malaysian ringgit slips to 3-week low

BENGALURU: Equities in emerging Asian markets rose on Monday after a stronger-than-expected US jobs report reinforced bets that the world’s largest economy is headed for a soft landing, while currencies in the region weakened.

The MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 0.3%.

Taipei stocks jumped 1.8% to lead gains in Southeast Asia. They were closely followed by equities in Manila which was up 1.7% after hitting their highest level in more than four-and-a-half years earlier in the session.

The US jobs report on Friday pointed to a resilient economy and spurred markets to reduce bets of outsized Federal Reserve rate cuts.

Bets for a hefty 50-basis-point cut at the Fed’s November policy meeting - which had been above 50% a week ago - were completely erased after the report.

Easing fears of a US hard landing should help contribute towards better performing equities, Khoon Goh, head of Asia research at ANZ said, adding that stronger emerging Asian equities would attract foreign inflows, helping currencies recover.

“The sellout we are seeing today might extend later into the week.”

Reduced pricing for the Fed’s next rate cut strengthened the US dollar, in turn weighing on Asian currencies. The MSCI’s gauge of emerging market currencies was down 0.4%, hovering close to a three-week low.

The Malaysian ringgit weakened as much as 1.6% to 4.282 per US dollar, its lowest since Sept. 17.

The Indonesian rupiah slipped 1.4% to levels last seen in mid-August.

Investors also braced for a data-heavy week, kicked off by Thailand’s annual headline inflation, which quickened in September but was below the central bank’s target range of 1% to 3%.

Thailand’s baht weakened 1.2%, while local stocks edged 0.4% higher.

Also due this week are Taiwan’s September inflation data and central bank decisions in South Korea and India on their base rate and repurchase rate, respectively.

The focus will also be on the key National Development and Reform Commission (NDRC) press conference in China on Tuesday, when the markets reopen after a week-long holiday.

NDRC officials will brief reporters on steps to implement policies to promote economic growth.

Their comments could determine whether the rally in Chinese stocks before the Golden Week holiday will continue, “with a possible impact on emerging Asian assets,” Khoon said.