BENGALURU: Asian currencies were largely subdued on Thursday and were headed for monthly declines, while equities were mixed as investors remained cautious ahead of the US inflation data that could give clues on the Federal Reserve’s rate outlook.
Regional currencies which gained by the end of 2023 on an unexpectedly dovish shift from the US Federal Reserve, have lost their ground in 2024, reflecting gains in the dollar as markets have scaled back expectations of a cut to June, where wagers were on March in start of the year.
The Thai baht edged 0.1% higher, set for a 1.3% loss for February, while Singapore dollar gained 0.1%, eyeing an 0.3% monthly fall.
Malaysia’s ringgit inched up 0.1%, but was on track to lose 0.7% for the month and has declined 3.7% so far in 2024.
The currency reached a 26-year-low last week to the levels last seen during 1998 Asian financial crisis.
Country’s second Finance Minister Amir Hamzah Azizan said, Malaysia expects the ringgit’s value to appreciate this year, given it’s positive fundamentals and prospects, adding that the government will not peg the ringgit as it did during the 1998 crisis.
The response echoed previous statements from Prime Minister Anwar Ibrahim and central bank Governor Abdul Rasheed Ghaffour that the currency is undervalued.
The increased frequency of officials talking about the ringgit suggest that they have stepped up scrutiny of the ringgit’s move, said Christopher Wong, currency strategist at OCBC.
“If there is excessive volatility or one-sided move, then it is likely to warrant some action,” he added.
Meanwhile, the Taiwanese dollar declined 0.3%, and was set to lose 1.2% in February after a 1.8% fall in January.
Traders in Taiwan said cross-strait tensions weighed on the local currency, which rose slightly on the dollar on Thursday. China’s coast guard has begun patrolling near the Taiwan-controlled Kinmen islands after two Chinese nationals died trying to flee Taiwan’s coast guard.
Stocks in the region were largely mixed ahead of US January personal consumer expenditures (PCE) price index - Fed’s preferred inflation measure. It is expected the index to have risen 0.3% on a monthly basis after a 0.2% increase in December, according to Reuters poll.
“Given the strong (US) CPI and PPI, the greenback is unlikely to be affected by a reading that shows a pick-up on a monthly basis unless it turns out be much higher than the prior month,” analysts at Maybank wrote.