Most emerging Asian currencies weakened against the greenback on Monday as investors braced for a data-packed week culminating in a US jobs report, with the Indonesian rupiah being the top loser in the region ahead of domestic inflation data.
The Indonesian rupiah weakened 0.5% while equities edged 0.6% higher, ahead of the country’s inflation data due later in the day.
“Indonesia’s inflation has moderated significantly in recent months and more of the same is expected today, adding to speculation of an imminent BI (Bank Indonesia) rate cut,” said Alvin Tan, head of FX Strategy at RBC Capital Markets.
A string of inflation data is due this week, including in Philippines, Taiwan, Thailand and South Korea, which could provide clarity on interest rate paths.
Asian currencies set for monthly gains
Malaysia’s central bank, Bank Negara Malaysia, is set to conduct its monetary policy meeting this Thursday.
The central bank has held rates steady since May 2023, after delivering a cumulative 125 basis points in hikes over the previous year.
“The risk to inflation continues to be on the upside, in our view, and hence we think the central bank will keep the policy rate unchanged for the rest of this year,” Goldman Sachs said in a note.
The Chinese yuan slipped 0.2% while Shanghai stocks fell 0.7%. Data from Saturday showed the country’s manufacturing activity sank to a six-month low in August as factory gate prices tumbled and owners struggled for orders.
Globally, traders will focus on a run of key data before the Federal Reserve’s September meeting, including the release of the US government’s employment report and US non-farm payrolls data for August on Friday.
In Asia, the Malaysian ringgit slipped 0.3% while Kuala Lumpur stocks retreated 0.2%.
The Thai baht depreciated 0.4% while local stocks fell 0.3%.
Both the Philippine peso and Manila stocks fell 0.3%.
Philippine inflation was likely to be within a 3.2% to 4.0% range in August, compared with an annual inflation rate of 4.4% in July, the central bank said on Friday.