Asian currencies: Manila market rallies as central bank weighs easing next week

BENGALURU: Manila stocks were set for their best week in nearly four years on Friday as investors in the Southeast Asian nation priced in policy easing by the central bank, in a week otherwise marred by fears of a global trade war.

The Philippine benchmark index, while down 0.8% on Friday, was on track to add 5.6% for the week, set for its best since late May, 2021. The peso was up about 1% for the week and was set for its best since December, 2024.

The country, which declared a food security emergency on Monday in a bid to tame rice prices, reported economic growth a touch lower than the central bank’s target for a second straight year.

The weak data print could encourage the Philippine central bank to cut interest rates at its meeting next week from the current 5.75%. The Bangko Sentral ng Pilipinas (BSP) cut rates by a total of 75 basis points last year to bring borrowing costs to a two-year low.

“While a quarter point rate cut would not be the magic bullet that can slay macro risks, the BSP’s sustained rate action contributes to lower costs of funding and doing business while sowing the seeds for investment-driven growth that can help create jobs and incomes,” said Ruben Carlo O. Asuncion, chief economist at The Union Bank of Philippines.

“BSP is expected to continue easing on weaker growth despite a slight upside surprise in January inflation,” said Citi analysts.

Among other stock markets, shares in Indonesia fell up to 3.2% to hit their lowest since November, 2023, led by slumps in PT Barito Renewables Energy, PT Petrosea Tbk and PT Petrindo Jaya Kreasi, which dropped 19.9%, 23% and 20% respectively.

The stocks plunged after global index provider Morgan Stanley said it would not include the three firms under a rebalancing or reshuffling of index constituents in February 2025.

Shares in Jakarta were set for their worst week since May 2022 on account of steep losses in the beginning half reflecting US President Donald Trump’s tariff threats and weak earnings from major lender Bank Mandiri. The rupiah was trading flat on Friday.

Emerging Asian currencies were mostly subdued and the US dollar steadied as markets watched Trump’s policy moves and awaited US non-farm payroll figures due later in the day.

The Taiwan dollar and its counterpart in Singapore were trading flat while the Thai baht added 0.3%.

India markets are awaiting a monetary policy decision by its central bank later in the day, with the RBI widely expected to cut its key rate for the first time in nearly five years to support the sluggish economy.

Stocks in Taiwan, Singapore and Thailand added 0.4%, 0.5% and 0.1% respectively.