South Korea won, stocks rally on vaccine cheer; Singapore budget awaited

  • The greenback eased as risk appetite firmed on global vaccination progress, lifting the Malaysian ringgit, Indonesian rupiah and the Thai baht between 0.1% to 0.2%.
16 Feb, 2021

The Singapore dollar edged up on Tuesday ahead of the city-state's 2021 budget, while South Korea's won and stocks extended their rally on plans to vaccinate the entire country's population.

The greenback eased as risk appetite firmed on global vaccination progress, lifting the Malaysian ringgit, Indonesian rupiah and the Thai baht between 0.1% to 0.2%.

Singapore's dollar and stocks both firmed around 0.2% as investors awaited details of the budget which is expected to be expansionary, but trimmed down compared to last year, to support still struggling sectors such as tourism.

"Given the fading pandemic economic impact and generally improving economy, the government is likely to calibrate its budget support to be more targeted at sectors and individuals affected by the COVID-19 situation," Standard Chartered analysts said in a note.

"Markets may be watching if the government announces further details on borrowing to fund long-term expenditure."

The city-state took on record budget deficit in 2020 to deliver a massive fiscal stimulus to aid the economy, which on Monday reported a smaller-than-expected contraction in the fourth-quarter.

DBS expects officials to trim the 2021 budget deficit to S$10-S$12 billion from the S$74.2 billion ($56.10 billion) figure last year.

Meanwhile, the rupiah firmed for second day to hit a six-week high after Indonesia reported a bigger-than-forecast trade surplus for January on Monday, a trend analysts expect will continue and support the currency in the medium-term.

This should pave the way for Bank Indonesia to cut rate by 25 basis points on its meeting on Thursday, OCBC analysts said in a note.

South Korea's won rallied for fifth day to hit an over one-month high, while the benchmark stock index KOSPI jumped as much as 1% in its third session of gains.

Seoul markets cheered the government's arrangement with Novavax and Pfizer to get vaccines for 23 million more people, which would be enough to cover the country of about 53 million people.

In line with global markets, positive vaccine developments kept all Asian equities in the black, while financials powered India's benchmark to a record high.

China and Taiwan's financial markets were closed for a holiday.

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