Most Asian emerging currencies advanced on Friday as the dollar retreated on expectations of slower interest rate hikes by the US Federal Reserve, with Thailand’s baht the outlier.
The South Korean won rose 0.9% to lead gains among the region’s currencies. The Singapore dollar, Philippine peso and Indonesian rupiah appreciated 0.2% each. The Malaysian ringgit traded flat.
The dollar index, which measures the greenback against six counterparts, declined 0.3% to 104.52 and aided risk sentiment.
“The attempt for some breather to end the week could be at play, but mostly wait-and-see sentiments could prevail,” Yeap Jun Rong, a market analyst at IG, said in a note.
“The lead-up to several key risk events next week may refrain market participants from taking on too much exposure,” Rong said.
Data on Thursday showed that US jobless claims rose moderately last week, pointing to a still-tight and strong labour market despite growing fears of a recession.
Markets are focused on US producer price inflation figures later in the day and the country’s consumer inflation data due next week for signs on the pace of the Fed’s tightening cycle.
The policy-setting Federal Open Market Committee is a key event that will begin on Dec. 13.
Most Asian currencies rise on easing of some COVID curbs in China
Appetite for risky Asian assets was further boosted on hopes of economic recovery in China as the world’s second-largest economy and the region’s biggest trading partner dropped key parts of its stringent zero-COVID regime.
China’s Premier Li Keqiang was quoted by state media on Thursday saying that the implementation of anti-COVID adjustment measures will allow the country’s economic growth to pick up pace.
Meanwhile, the baht fell 0.3% to be the only outlier among Southeast Asian currencies. Equities in Bangkok were flat.
“Foreign investors have been taking profits from the Thai stock market so these foreign outflows could put some pressure on the baht,” said Poon Panichpibool, a markets strategist at Krung Thai Bank.
Stock markets in Southeast Asia were broadly trading higher, with equities in Seoul up 0.6% and stocks in Kuala Lumpur advancing 0.3%.
Equities in Singapore added 0.2%. Philippine’s benchmark index rose 0.6% after a public holiday.
On the downside, stocks in Jakarta dropped 1%.
Separately, China’s factory-gate prices showed an annual fall for a second month in November while consumer inflation slowed, indicating weak economic activity and soft demand.
Highlights:
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China’s COVID easing seen knocking growth early next year before recovery kicks in
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Indonesian 10-year benchmark yields fall 3.6 basis points to 6.917%
The following table shows rates for Asian currencies against the dollar at 0358 GMT.
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