Most Asian currencies firmed on Friday, gathering momentum from a muted greenback ahead of Donald Trump’s return to office next week, while stocks were mixed after surprise rate calls from several regional central banks.
The yuan looked set for its first weekly gain in over a month, after a slew of data showed China’s economy ended 2024 on stronger footing than expected, which also buoyed Chinese stocks.
An index of emerging market currencies was flat, taking a breather on its recovery path from a six-month low touched earlier in the week. The index looked set to snap six weeks of losses.
The dollar index lingered around the 108.94 level, further drifting away from its high of more than two years touched earlier in the week after the yen strengthened on growing expectations of a rate hike from the Bank of Japan next week.
The yen slipped 0.2% during the day but could end the week 1.4% higher, its strongest performance since November-end, 2024.
The Indonesian rupiah was the lone outlier, hovering near its six-month low after Bank Indonesia (BI) delivered a surprise 25 basis point rate cut on Wednesday against expectations of a hold, prioritising economic growth over currency stabilisation.
Asian currencies: Rupiah, won hit by surprise central bank rate calls
Following BI, Bank of Korea (BOK) stunned markets with a surprise hold in an effort to support the won amid political instability, disasters and the strong dollar.
The Korean won was up 0.1%, however, and is likely to record its strongest weakly performance since September 2024 with an 1.1% gain.
“The policy decisions made by the BOK and BI this week reflect differing priorities of the central banks, at present,” said Kausani Basak, FX analyst at ANZ.
“The KRW has depreciated steeply in January and the BOK holding interest rates steady reflects concerns about currency weakness.
However, the BoK has acknowledged intensifying downside growth risks, and a rate cut at its next meeting in February 2025 is on the cards.“
The Thai baht rose 0.2% while the Singapore dollar , Malaysian ringgit and Philippine peso were mostly flat.
The Singaporean currency is poised to end the week up 0.4%, snapping a six-week losing streak.
Among equities, Philippine advanced 0.5% while shares in Singapore and Jakarta gained 0.4% each.
Stocks in Seoul and Bangkok slipped 0.1% and 0.3%.
Next week, markets will focus on US President-elect Trump’s inauguration speech on Monday and await monetary policy decisions from Bank Negara Malaysia (BNM) and Bank of Japan (BOJ).
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