Most Asian currencies strengthened on Friday, with Thailand’s baht leading the charge, after a jump in US weekly jobless claims hardened expectations of a pause in the Federal Reserve’s policy tightening cycle when it meets next week.
The Thai baht climbed as much as 0.7% to a one-week high, though, it is down 0.3% so far this week. South Korea’s won and the Malaysian ringgit advanced 0.6% and 0.2%, respectively.
Poon Panichpibool, a markets strategist with Krung Thai Bank, foresees an end to interest rate increases by the Fed for the remainder of this year.
“I think they will keep the policy rate at 5% to 5.25% for maybe most of the year, though, they (the Fed) might decide to cut in the late fourth quarter, if the US economy enters a recession,” he said.
The number of Americans filing new claims for unemployment benefits surged to the highest in more than 1-1/2 years last week, data which led to a retreat in the US dollar as investors took it as an indication of a slowing labour market.
Asian currencies inch higher on retreating Fed rate hike bets
The dollar index was last down 0.1% at 103.4 by 0404 GMT.
In Turkey, the lira hit its lowest level on record, down as much as 1.8%, ahead of the expected appointment of a new central bank governor.
The currency, which showed an easing in its sell-off in the previous session, stood at 23.54 against the US dollar by 0341 GMT.Among other currencies, the Philippine peso and Singapore dollar weakened 0.1% each.
The Philippine central bank said on Thursday it will cut banks’ reserve requirement ratios (RRR) to ensure stable domestic credit conditions, moving to offset the expiration of liquidity-enhancing relief measures for lenders during the pandemic.
The Bangko Sentral ng Pilipinas, however, reiterated that a lower RRR did not indicate a shift in its monetary policy stance.
In Malaysia, factory output shrank by 3.3% in April, government data showed, below expectations of a 2% expansion according to 13 economists surveyed in a Reuters poll.
In China, inflation data, and particularly the producer prices, once again highlighted weakness in the manufacturing sector and an economy struggling for lift-off after COVID.
China’s yuan weakened 0.2%, while, shares in the country was largely unchanged.
Equity markets in the region traded mixed, with shares in Mumbai and Manila retreating 0.1%, each. On the positive ledger, shares in Taiwan and South Korea advanced 0.8% and 0.9%, respectively.