Asian currencies gained on Tuesday against a soft greenback, with hopes of a resolution to the political stalemate in Thailand lifting the baht, while stocks mixed in the wake of China’s weak economic data.
The US dollar index, which measures the greenback against a basket of six currencies, dipped slightly to 99.84 in early Asia trade, after having tumbled to its lowest since April 2022 on Friday.
Thailand’s Pita Limjaroenrat, the surprise winner of a May 14 election, said on Monday that an eight-party alliance seeking to form the country’s next government reaffirmed their backing for Pita to become prime minister.
“Unwinding short positions on Thai baht against the dollar could support the appreciation recently despite uncertainty on Thai political issues as the House will hold a second vote for PM tomorrow amid China’s economic slowdown,” said Kittika Boonsrang, Senior Market and Economic Research Specialist at KASIKORNBANK Public Company Limited.
The Thai baht was the top gainer among its Asian peers, surging 0.9% to hit a two-month high while the Indonesian rupiah and New Taiwanese dollar added 0.1% and 0.2% respectively.
Asian FX, stocks fall as China data fails to lift markets, yuan drags
Thailand’s tourism ministry said on Tuesday the country received around 14.15 million foreign visitors from January till July 16 and expects to exceed 15 million by the end of the month.
The South Korean Won was also one of the major gainers, rising 0.5% while the local share market eased 0.6%.
“The stronger Chinese yuan fixing is probably the main reason why the won is gaining,” said Kang Min Joo, senior economist at ING.
Given the weak performance of the Korea Composite Stock Price Index (KOSPI) and overall buying of Korean assets is quite weak, we expect a partial unwinding of won appreciation, she added.
The yuan in China gained 0.1% against the dollar while mainland China shares extended losses as the country’s economic growth continues to disappoint investors.
Data released on Monday showing China’s economy grew at a frail pace in the second quarter as demand weakened at home and abroad continued to weigh on sentiment. Stocks in Singapore, Indonesia fell 0.1% and 0.5% respectively while shares market in Philippines added 0.2%.
Analysts at Nomura said China’s weak data will not prompt Beijing to step up stimulus measures, adding that markets might need to further revise down annual GDP growth forecasts on the world’s second largest economy.