BENGALURU: Most Asian currencies were subdued on Tuesday as traders refrained from making fresh bets ahead of a key US inflation report that could influence the Federal Reserve’s rate trajectory.
Investors are laser focused on the consumer price index data expected later in the day, with a forecast monthly increase of 0.4%. Any sudden upside surprises could potentially lead to investors exiting riskier assets.
Ahead of the release, a Reuters poll showed that the Fed is likely to slash rates in June.
At 0645 GMT, the dollar index was at 102.79.
In Asia, Thailand’s baht led the laggards for the day, dropping about 0.4%, while the Taiwan dollar treaded water.
The Philippines peso reversed losses to trade flat. The archipelago nation’s trade deficit widened slightly in January to $4.22 billion from $4.18 billion the prior month, according to preliminary official data.
“While the peso has outperformed recently, we continue to see PHP underperforming through 2024 as the current account deficit remains large and FX valuations are not attractive,” Michael Wan, an FX strategist with MUFG, said in a client note.
The peso and the Indian rupee are the only emerging Asian currencies trading in the positive territory, having gained about 0.2% and 0.6%, respectively, on a year-to-date basis.
India is set to reveal CPI data post-market hours, which is likely to have edged to a four-month low, according to a Reuters poll.
Other currencies such as the Singapore dollar, Malaysian ringgit and South Korean won were unmoved.
Separately, Japan’s yen slipped 0.3% after the Bank of Japan governor toned down optimism over economic recovery, even with momentum building that central bank officials might shift towards ending negative rates.
Elsewhere, Argentina slashed its interest rates to 80% from 100%. The country’s peso last traded at 848.00 per dollar.
In Asia, most markets perked up, with stocks in Seoul, Kuala Lumpur, Manila and Singapore rising between 0.2% and 0.8%
Taiwan shares rose nearly 1%, not far from a record high posted last week that was propelled by enthusiasm across global artificial intelligence stocks.
“We maintain our view that the AI-wave, which is driving the tech cycle’s turn in Korea and Taiwan, is likely to have fewer spillovers into South East Asia’s economies, which serve the downstreaming services for production of legacy chips,” Barclays analysts wrote.
Bank of America analysts estimated that Korean equity markets received inflows worth $6.12 billion, followed by Taiwan, which got $3.9 billion in February.
Indonesia markets remained closed for a public holiday.