Asian currencies: Taiwan dollar largely unchanged

BENGALARU: The Taiwan dollar was largely unchanged.

Taiwan’s defence ministry said China is deploying its largest navy fleet in regional waters in nearly three decades, posing a threat to Taiwan that is more pronounced than previous Chinese war games.

Currencies in the region were mostly flat ahead of crucial US CPI data on Wednesday, which is expected to strengthen Federal Reserve rate cut expectations later this month.

Emerging Asian shares rose on Tuesday on upbeat sentiment after China pledged policy support to boost consumption and ease monetary policy and South Korean shares rebounded after policy makers vowed to stabilise markets.

South Korean shares jumped as much as 2.5% after hitting a 13-month low on Monday, as equities and the won came under pressure due to deepening political tensions following a failed impeachment motion against President Yoon Suk Yeol. The won advanced 0.6% on Tuesday.

The country’s financial authorities said financial markets were volatile recently and reaffirmed they would respond actively with stabilising measures.

“The moves so far in FX markets may look excessive in the short term. Political uncertainty in Korea may temporarily weigh on KRW (the won), but this should fade once we get more clarity,” said Christopher Wong, a FX strategist at OCBC.

Chinese state media outlet Xinhua reported on Monday the top Communist Party officials had shifted the monetary policy stance from “prudent” to “moderately loose”, similar to their approach during previous crises.

The move, which aims to stabilise markets and “vigorously” boost consumption, sent Chinese long-dated government bond yields to record lows. Equities jumped as much as 2.7% to hit their highest levels in a month and the yuan rose 0.2%.

An MSCI gauge of Asian emerging market equities, in which China holds a weightage of around one-third, jumped as much as 1.4% before paring some gains. Equities in Singapore climbed 0.5% while those in India edged higher.

China’s comments came ahead of the annual Central Economic Work Conference, which is expected to set key targets and policy intentions for next year.

“The policy shift reignited China stimulus hopes and bolster RMB (yuan) sentiment, providing support to EM Asian currencies,” said Ken Cheung, chief Asian FX strategist at Mizuho Bank.