Asian FX broadly higher on lower oil prices; set for quarterly drop

BANGKOK: Most Asian currencies strengthened on Thursday, as a sharp drop in crude oil prices eased fears of inflation, although most units including the Indian rupee and the Philippine peso were on track for quarterly declines due to geopolitical turmoil.

The peso rose 0.4%, while the rupee, which was on course to clock its worst quarter since March 2020, was up 0.2%.

Oil prices dropped more than 5% on reports that the United States was considering the release of up to 180 million barrels of oil from its strategic reserves over several months in a bid to ease soaring prices.

Asian currency markets have been buffeted by a series of geopolitical and economic events in the latest quarter, prompting market participants to keep a wary eye on the impact of the Ukraine crisis, runaway inflation and the Federal Reserve’s hawkish policy stance on the global economy.

The Thai baht gained 0.2%, a day after its central bank left interest rates unchanged and trimmed its economic growth outlook. It, however, is down more than 2% for March, as rising COVID-19 cases and lockdowns in China hamper tourism prospects for the country.

“To some extent, THB sentiment could be aided by signs of renewed downturn in oil prices,” Maybank analysts wrote in a note to clients.

Investors also tracked Russia’s continued military action in Ukraine, a day after Moscow promised to scale back military action.

“The ongoing hot and cool tone in the geopolitical conflict may continue to drive shifts in market sentiment as we edge closer to the weekend break,” said Yeap Jun Rong, a market strategist at retail trading platform IG.

Although, the Malaysian ringgit and the Indonesian rupiah were able to trim quarterly losses to 0.9% and 0.7%, respectively, they were still set for their worst quarters in five.

The rupiah was set for a marginal monthly gain though.

Benchmark bond yields in Singapore and Indonesia declined for a second straight session, dropping 20 basis points and 2 basis points respectively.

Equities in Asia were mixed, with stocks in Singapore declining 0.4%, while those in South Korea and the Philippines advanced 0.4% and 0.5%, respectively.

Most regional equities were set for quarterly gains, with markets in Singapore and Jakarta set to add 9.8% and 7.4%, respectively.