The Thai baht and South Korean won led sharp gains among Asian currencies on Tuesday, with stocks slipping as a pull-back in the benchmark 10-year US Treasury yield improved sentiment while investors awaited economic data from the US later in the week.

The yield on the benchmark 10-year US Treasury note briefly rose above 5.0% on Monday before quickly declining.

In Asian hours, the yield was up 1 basis point to 4.848% on Tuesday.

Yields slumped amid volatility on the back of expectations that the US Federal Reserve will keep rates higher for longer than anticipated.

“Overnight softening of the greenback is poised to offer respite to Asian currencies, particularly those that plummeted past last year’s lowest values,” said Philip Wee, senior FX strategist at DBS Group.

The baht was the top gainer, rising 1% and hovering near its highest level since Sept. 22.

“The rise in the baht is in line with the pullback in US Treasury yields,” said analysts at Maybank in a note.

“High gold prices look to also be giving support to the baht,” they added while expecting the USD/THB pair to range trade around 36.0-37.0 in the near term.

Asian currencies: Indonesian rupiah, Thai baht decline as ME conflict strengthens dollar

Thailand’s currency has been one of the worst performers in 2023 and has fallen 4.5% this year, but it has gained 0.7% in October.

South Korea’s won was also one of the top gainers against a falling dollar, touching its highest since Oct. 12.

Maybank analyst see a potential for the USD/KRW pair to consolidate around the 1325 to 1375 range.

South Korea’s key policy rate is at a near 15-year high of 3.5%, with the central bank last week standing pat for the sixth meeting.

South Korea will report its advance estimates for third-quarter GDP on Thursday.

The Indonesian rupiah gained about 0.3% against the dollar, snapping a four-day losing streak.

Indonesia’s President Joko Widodo said the rupiah’s recent rate of depreciation against the dollar was still “safe” for Southeast Asia’s largest economy and its inflation targets.

Bank Indonesia unexpectedly raised interest rates last week to arrest the rupiah’s decline amid US monetary tightening and rising geopolitical risks.

South Korea’s benchmark index fell as much as 1.3% to their lowest since Jan 9.

Equities in Philippines and Malaysia dropped 0.2% and 0.3% respectively whereas stocks in Indonesia and China added 0.9% and 0.4%.

India markets were closed for a public holiday.