Asia currencies: S Korean won and Thai baht edges lower

BENGALURU: Emerging Asian equities trended lower on Tuesday as investors took stock of regional governments’ trade talks with the US, with Thai shares falling due to worries over the independence of the domestic central bank following a key appointment.

Thailand’s benchmark index fell over 1% after news that Vitai Ratanakorn, a perceived rate-cut advocate, would take the helm at the Bank of Thailand. The Thai baht slipped further, down 0.3% on the day.

“Given the weakness of Thailand’s economy, there is no doubt that the country needs lower interest rates,” said Gareth Leather, senior Asia economist at Capital Economics, but added the appointment may fuel concerns about the bank’s independence.

Thai equities have risen over 8% since reports of Ratanakorn’s appointment, anticipating monetary easing, but have also raised concerns about ongoing tensions between the BoT and the government regarding pressure for rate cuts.

“While we have some sympathy with the government’s argument that interest rates have been kept too high for too long, over the longer term, there is strong evidence that central bank independence tends o deliver better inflation outcomes,” added Leather.

Across the region, most stock markets were in the red, with Taiwan, South Korea and Malaysia posting losses between 0.3% and 1.5%. Taiwan equities extended their decline into a second session, giving back some of the 5% gain accumulated earlier this month.

Meanwhile, Jakarta’s benchmark continued to outperform, rising for a 12th straight session, underpinned by optimism following a recent US trade agreement and domestic policy easing.