BENGALURU: Most Asian currencies rose on Monday, as the dollar skidded at the start of a crucial week dominated by the US presidential election, the Federal Reserve policy meeting, and a slew of inflation reports from Asian economies.
The Philippine peso strengthened 0.3%, while the South Korean won and the Singapore dollar climbed 0.5% and 0.6%, respectively.
The dollar was down 0.5% as market participants braced for the US election on Tuesday and the Fed’s rate decision on Thursday.
Democratic candidate Kamala Harris and Republican Donald Trump remain virtually tied in opinion polls, while a 25-basis-point Fed rate cut has been fully priced in.
“Last week was basically the dollar rallying on greater expectations of a Trump victory. Now, I think as we get closer to the actual event, there’s a little bit of rebalancing going on,” said Robert Carnell, regional head of research, Asia Pacific, at ING.
Even if Trump wins, which would normally be dollar-positive, the initial response might not be for a dollar rally. Hence, investors are squaring positions, he said.
Meanwhile, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6%. Equities in South Korea jumped 1.8%, while those in Singapore rose 0.7%.
Investors are also awaiting inflation data from South Korea, the Philippines, Thailand, and Taiwan to gauge the rate outlook.
Last month, the Bank of Korea, Bank of Thailand and Bank Indonesia kicked off their easing cycles, while the Philippine central bank reduced rates by another 25 bps.
Most Asian central banks will ease policies more slowly than the Fed over the coming year as inflation remains broadly within targets and growth is still resilient, a Reuters poll showed.
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