Most Asian currencies traded narrowly on Wednesday, as investors turned their focus to US data for more clues on the path of monetary policy, while the Thai baht weakened ahead of an expected rate hike.
The Singapore dollar, Philippine peso and Indonesian rupiah traded between 0.1% firmer and 0.1% weaker.
Markets have been concerned about a global banking sector downturn since the unexpected failure of two US regional banks and the rescue of Credit Suisse in Europe.
Late last week, Deutsche Bank’s 5-year credit default swaps rose to late-2018 levels, indicating slowing confidence in the sector. However, they later eased.
“The weekend concerns (over banking sector) have certainly dissipated partially, although I still anticipate some of the concerns to linger on” said Jeff Ng, a senior currency analyst at MUFG.
“I think, maybe right now, the markets may be taking a breather and watching out for the PCE numbers on Friday.”
Investors are looking out for February’s personal consumption expenditures (PCE) data from the US, the Federal Reserve’s preferred inflation gauge, expected late on Friday, for further direction on interest rates and the dollar.
The dollar index was 0.1% higher in Asia hours.
Thailand’s baht weakened 0.4% ahead of a policy meeting where the central bank is expected to raise rates by 25 basis points, the fifth consecutive one.
Analysts at UOB expect the Bank of Thailand to halt further rate hikes after Wednesday’s review as the tourism-reliant economy benefits from China’s reopening.
“Less robust growth recovery will also render BOT less room to embark on an even tighter monetary policy in 2023,” they added.
Asian currencies strengthen as global banking concerns ease
In Vietnam, economic growth in the first quarter slowed due to a sharp fall in exports on weakening global demand.
The Vietnamese dong was unchanged, and continued to trade flat at about 23,485 to the dollar.
Among equities, Hong Kong-listed shares of Chinese tech firm Alibaba Group soared as much as 16.3% after it announced its biggest restructuring yet, by splitting its businesses into six main units.
Alibaba’s founder Jack Ma also returned to China after a year-long stay abroad, which further bolstered confidence in the country’s tech sector, which has been battered following months of regulatory scrutiny.
However, markets in China were flat, while other equity markets logged some modest gains.
Markets in Singapore, Indonesia and Malaysia rose between 0.1% and 0.8% each.
Highlights:
** Indonesia’s 10-year bond yield up 1.9 bps to 6.821%
** China threatens retaliation if US House speaker meets Taiwan’s president
** Malaysia’s central bank maintained its 2023 growth forecast at 4% to 5%, saying risks remain “fairly baReuters