Most Asian currencies slip ahead of likely Fed hike

The Taiwan dollar and Thai baht led losses among weak Asian currencies on Monday, as investors braced for the US Federal Reserve’s meeting later this week, even as expectations rise for a pause in rate hikes in the future.

Taiwan’s dollar lost about 0.5%, slipping to its weakest since July 11 and was on track for its fourth consecutive session of losses.

Market participants expect a 25 basis point rate hike at the Federal Open Market Committee meeting which concludes late Wednesday, with all eyes on Fed Chair Jerome Powell’s speech on the trajectory of rate hikes in the near term.

At 0340 GMT, the dollar index, which measures the strength of the greenback against six major rivals, stood at 101.02.

“The Fed, under Chair Powell, has never surprised markets. Forward guidance will be key – the recent disinflationary trends suggest the Fed will likely be done after delivering this rate hike,” analysts from Standard Chartered said in a note.

Additionally, a Politburo meeting in China sometime later this week to announce stimulus measures to beef up its stuttering economy is being looked forward to by investors, who by far, have not been optimistic over the country’s recovery.

“Recent stimulus measures to boost consumption of automobile and electronics items failed to provide much conviction that they will be sufficient to uplift the downbeat growth conditions, with mounting hopes on the China Politburo meeting this week for more follow-through,” Yeap Jun Rong, a market analyst from IG said.

Elsewhere, political uncertainty in Thailand kept the baht and stocks on tenterhooks as hundreds on pro-democracy protesters gathered on Sunday to support Pita Limjaroenrat, the leader of the Move Forward party, after opponents thwarted his latest efforts to become prime minister.

Thailand’s baht fell as much as 0.5% to trade about 34.6 per dollar, even as its shares edged marginally higher.

Other Asian currencies such as the Malaysian ringgit, Singapore dollar and the Indonesian rupiah traded between flat and down 0.4% The South Korean won bucked the overall trend to rise 0.1%.

Asian equities, however, traded mostly positively, with South Korea, Indonesia and Malaysia between 0.2% and 0.9% firmer.

Foreign exchange markets in the Philippines were shut due to the closure of public offices in the capital region, and trading resumes on Tuesday.

The country’s stocks, however, rose 0.2%.