BENGALURU: Most Asian currencies were subdued on Friday from a muted greenback, ahead of US President-elect Donald Trump’s return to office next week while stocks traded mixed in the wake of surprise rate calls from several regional central banks.
The yuan looked set for its first weekly gain in over a month.
A slew of data showed that China’s economy ended 2024 on stronger footing than expected, buoying Chinese stocks, which are set to log their first weekly gain in three weeks.
An index of emerging market currencies was flat, taking a breather on its recovery path from a six-month low touched earlier in the week. The index looked set to snap six weeks of losses.
The dollar index lingered around the 108.94 level, drifting further away from its high of more than two years hit earlier in the week after the yen strengthened on growing expectations of a rate hike from the Bank of Japan next week.
The yen slipped 0.3% during the day but could end the week 1.3% higher, its strongest performance since November-end.
The Indonesian rupiah was the lone outlier, hovering near its six-month low after Bank Indonesia delivered a surprise 25-basis-point rate cut on Wednesday, prioritising economic growth over currency stabilisation.
The Bank of Korea stunned markets with a surprise hold bringing in support for the won, which was flat during the day but is likely to record its strongest weekly performance since September 2024 with a 1% gain.
The central bank holding interest rates reflects concerns about currency weakness but it has acknowledged intensifying downside growth risks, and a rate cut at the next meeting in February 2025 is on the cards, said Kausani Basak, FX analyst at ANZ.
The Thai baht rose 0.3% while the Singapore dollar , Malaysian ringgit and Philippine peso were flat.
The Singaporean currency is poised to end the week up 0.4%, snapping a six-week losing streak.
Among equities, Indonesia rose 0.7% while Philippine shares were up 1.4%.
Stocks in Seoul and Bangkok were about 0.2% lower each.
Next week, markets will focus on Trump’s inauguration speech on Monday and await monetary policy decisions from Bank Negara Malaysia and Bank of Japan.
Despite the more downbeat growth outlook amid stable inflation, the Malaysian central bank is unlikely to respond through monetary policy given the recent volatility in ringgit and continued dollar strength, said ANZ analysts.
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