The Philippine peso was among the top gainers in Asian currencies on Tuesday after the central bank said it could intervene in the foreign exchange markets to support the currency.
The Philippine peso strengthened by 0.3% and the Thai baht rose marginally while the Singapore dollar gained 0.2%.
The Philippine central bank could intervene to prevent a repeat of last year’s slump in the peso to 60 to the dollar, with the currency having weakened since mid-July, to hit on Aug.14 its lowest level since November.
“The underlying downward trend of the peso remains intact as long as it is safely confined below the 56.35 to 56.95 resistance levels,” said Michael Ricafort, chief economist at Rizal Commercial Banking Corporation.
Following suit, Thailand’s central bank also flagged that it may step in to limit any excessive volatility in the baht currency.
The Thai currency has been volatile since the May 14 election that resulted in political deadlock.
But Tuesday’s return of fugitive former premier Thaksin Shinawatra from 17 years in self-exile coincides with a bid by his political allies to form a new government with some of their biggest rivals.
The US dollar index weakened 0.1% to 103.2 by 0432 GMT, supporting currencies in the region.
Traders are bracing for the U.S Federal Reserve’s annual symposium in Jackson Hole, Wyoming, which starts on Friday, amid expectations that central banks could keep rates higher for longer.
“It’s a very difficult week running up to a meeting where you feel that strategically, he (Fed Chair Jerome Powell) needs to continue to sound hawkish but at the same time there is growing groundswell of opinion within the Fed saying ‘Let’s not overdo it,’” said Rob Carnell, ING’s Asia-Pacific head of research.
“(Powell) has a tendency even when he wants to give a hawkish speech, ending up giving a dovish one. So yeah, I wouldn’t be putting a lot of money on the table ahead of this one.”
Most Asian stocks gained, with shares in Thailand climbing 0.7% for their best day since July 31. Equities in Manila slipped more than 0.6%, however.
Jakarta’s benchmark index rose 0.6% while the currency fell marginally after a Reuters poll showed Bank Indonesia will keep its key interest rate steady at 5.75% for a seventh straight meeting on Thursday.