The Thai baht firmed on Wednesday on hopes of a tourism boost after the easing of COVID restrictions in China, while most other Asian currencies remained muted ahead of the release of US Federal Reserve policy meeting minutes.
The baht rose for the fourth session in a row, up 0.8% to its highest since May 31.
Thailand is expecting at least 5 million Chinese tourist arrivals this year as China reopens its borders, in what could be a further boost to the Southeast Asian country’s economy and its vital tourism sector.
Still, the possibility of another COVID wave cannot be ruled out, Poon Panichpibool, markets strategist with Krung Thai Bank, said.
“This could cause more stress for the healthcare system if the government is not well-prepared,” he said, adding that such a scenario could spur profit-taking on Thai assets.
The Singapore dollar was steady after rising 0.3%. It was the best-performing regional currency in 2022, supported by proactive fiscal intervention by its monetary authority.
China’s yuan hovered around a four-month high against the dollar on Wednesday, boosted by investor expectations of more policy support to boost the economy.
The greenback wobbled in Asian trading hours, down 0.22% after an overnight spike.
Minutes from the Fed’s December meeting, when it cautioned that rates might need to remain higher for longer, are due to be released during US business hours and will be parsed for clues on whether more policy tightening is likely.
Most Asian emerging currencies remained subdued, weighed by concerns of a projected global slowdown.
Thai baht leads gains in Asian FX, Fed minutes in focus
The Indonesian rupiah weakened 0.1% and the South Korean won fell 0.3%.
Malaysia’s ringgit was flat after data earlier in the day revealed a further contraction of manufacturing activity in December.
“We expect slower activities in regional production will remain for now on the back of weaker demand and in anticipation of slow growth in advanced markets,” MIDF Research said in an emailed note.
The Philippine peso and the Indian ruppee were broadly unchanged.
Among equities, Philippine stocks climbed nearly 2.6% to their highest level since Dec. 1, while those in Jakarta and Thailand fell 0.2%.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.5%, set for a third straight day of gains for the year.
Indian stocks declined 0.8%, with metals leading a broad-based retreat.
Meanwhile, India’s services industry saw activity increase at the fastest pace in six months in December, data showed on Wednesday, indicating robust domestic demand during the festive season.
However, Barclays analysts see a modest slowdown in activity in the coming months as the global growth outlook appears dimmer.
Highlights:
** Japan’s Nikkei share average closed at its lowest level in almost 10 months on the first trading session of 2023 on Wednesday
** Seoul shares recovered early losses and turned higher, with heavyweight chipmakers leading the gains. The won weakened, while the benchmark bond yield fell.
** Malaysian palm oil futures slid from a near five-week high hit in the previous session, although concerns over tightening supply from top producer Indonesia capped losses