BENGALURU: Most Asian currencies rallied on Thursday on growing hopes for Federal Reserve rate cuts, with the Philippine peso advancing after the central bank delivered an anticipated interest rate cut, while signalling its easing cycle may be complete.
The Philippine peso appreciated 0.3 percent to 56.96 against the US dollar, after three sessions of losses, while the benchmark stock index lost more than 1 percent.
“The peso strengthened following the BSP’s rate cut, which offered no dovish surprises beyond market expectations,” OCBC currency strategist Christopher Wong said.
Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona emphasized the central bank still sees more significant risks to the inflation outlook than to economic output, and when asked whether the easing cycle has ended, said, “based on data, yes, it would be.”
DBS senior economist Radhika Rao said one more reduction in the fourth quarter of 2025 is likely by BSP, as policymakers tap a period of soft inflation to take a more growth-supportive stance.
The South Korean won led the currency rally, climbing 0.5 percent after the Bank of Korea held rates steady in a widely anticipated decision. Seoul’s Kospi index mirrored the currency strength, advancing 0.3 percent.
The Thai baht, Philippine peso, and Malaysian ringgit advanced 0.2 percent, each.
Equities showed broader momentum, with the benchmark indexes in Jakarta and Kuala Lumpur adding 0.6 percent and 0.2 percent, respectively. Shanghai’s composite index outpaced regional peers, jumping more than 1 percent.
Meanwhile, traders amplified bets for a Fed rate cut next month after New York Fed President John Williams signalled a reduction was possible. The US dollar index edged down 0.1 percent, in its third straight session of losses.