Asian FX weakens against sturdy dollar, Malaysian ringgit down more than 1%
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Malaysian ringgit drops from 3-1/2-year high
China markets closed for rest of the week
Tokyo shares close 1.9% higher
By Archishma Iyer
Oct 1, (Reuters) -The Malaysian ringgit fell more than 1% on Tuesday as emerging Asian currencies lost ground against a stronger dollar after Federal Reserve Chair Jerome Powell signalled that another outsized interest rate cut was unlikely in November.
The ringgit MYR= fell from a 3-1/2 year high scaled on Monday and was last trading at 4.173 per dollar, while the Thai baht THB=TH slipped from its early 2022 highs.
Both currencies have outperformed in the ASEAN region, driven by improved political stability, foreign inflows and stable growth outlooks.
Other currencies such as the Taiwan dollar TWD=TP, Indonesia's rupiah IDR=, the Philippine peso PHP= and the Singapore dollar SGD= traded flat to lower.
In the United States, Powell pushed back against aggressive easing bets, forecasting the central bank was likely to stick with quarter-percentage-point rate cuts moving forward.
Falling U.S. rates boost the attractiveness of riskier assets and have driven cash into emerging markets, particularly into Southeast Asia where investors have held very low exposures for years.
This week, investors will monitor inflation data from South Korea and the Philippines to gauge the trajectory of monetary policies, while a key U.S. jobs report will likely decide the Fed's rate cut trajectory.
Indonesian prices rose at their slowest rate in almost three years in September, providing further room for the country's central bank to slash rates.
While Indonesia and the Philippines have already started easing monetary policies, pressure is mounting on the Bank of Korea to cut rates at its upcoming meeting as slowdown concerns linger.
The Philippine central bank flagged on Monday that it has room for a 50 basis-point cut, although 25 bps will be the norm.
"Not only have the Fed's rate cut and China's stimulus measures boosted the region's risk assets, but their actions could also embolden other central banks to opt for more aggressive rate cuts than our prevailing forecasts," said Juliana Lee, Deutsche Bank's chief economist for Asia.
Among Asian stock markets, Manila .PSI recovered the previous session's losses to trade 1.5% higher. Markets in Jakarta .JKSE, Bangkok .SETI and Taipei .TWII rose between 0.7% and 1%. Tokyo shares .N225 rose 1.9%, led by defence stocks.
Chinese markets are closed for the rest of the week for public holidays. Shanghai shares .SSEC had recorded their best session in 16 years on Monday after weekend stimulus measures led to global investors pouring their money into previously beaten-down Chinese stocks.
Markets in Seoul and Hong Kong were also closed due to public holidays.
HIGHLIGHTS:
** Malaysia plans national cloud policy, AI regulations
** Thai finance minister expects agreement on inflation target with cbank this month
** Asia's factory activity hit by global uncertainty, focus on China stimulus
Asian currencies and stocks at 0650 GMT | ||||||
COUNTRY | FX RIC | FX DAILY % | FX YTD % | INDEX | STOCKS DAILY % | STOCKS YTD % |
Japan | JPY= | -0.57 | -2.35 | .N225 | 1.93 | 15.50 |
China | CNY=CFXS | - | +1.14 | .SSEC | - | 12.15 |
India | INR=IN | -0.01 | -0.71 | .NSEI | 0.06 | 18.84 |
Indonesia | IDR= | -0.43 | +1.28 | .JKSE | 1.01 | 4.55 |
Malaysia | MYR= | -1.22 | +10.02 | .KLSE | -0.04 | 13.31 |
Philippines | PHP= | -0.45 | -1.51 | .PSI | 1.47 | 14.41 |
S.Korea | KRW=KFTC | - | -2.19 | .KS11 | - | -2.34 |
Singapore | SGD= | -0.11 | +2.56 | .STI | 0.00 | 10.65 |
Taiwan | TWD=TP | -0.66 | -3.53 | .TWII | 0.75 | 24.87 |
Thailand | THB=TH | -0.90 | +5.22 | .SETI | 0.75 | 3.10 |
Reporting by Archishma Iyer in Bengaluru; Editing by Jamie Freed and Subhranshu Sahu
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