BENGALURU: Asian currencies rallied on Wednesday as China’s stimulus measures boosted investors’ risk appetite, while the Thai baht hit a 30-month high, adding pressure on the country’s central bank to intervene and cut interest rates in Southeast Asia’s second-largest economy.
The Thai baht, which jumped as much as 0.9% to hit its highest since March 2022, has risen around 11% this quarter. The country’s stock market rose as much as 0.7% on Wednesday to a near one-year high.
Beijing has unveiled a raft of measures to boost its struggling economy, including policy easing plans on Tuesday and a medium-term lending rates cut earlier in the session.
“We see the measures as positive, indicating that policymakers are increasingly concerned about weakness in the economy and markets,” analysts at Morgan Stanley said.
The Thai baht, boosted by political stability, foreign inflows and gold prices hitting record highs, is up 4.6% this year, making it one of the top performers in Southeast Asia.
The sudden and rapid gains in the baht are affecting exporters by diminishing trade competitiveness, leading to rising calls for the Bank of Thailand to intervene and lower interest rates to protect both exports and tourism.
Thailand’s finance ministry and central bank are set to meet next week to discuss baht strength and the country’s inflation target.
Among other currencies, the Malaysian ringgit gained as much as 1.1% to 4.105 per US dollar, its highest level since mid-June 2021.
Malaysia’s robust economic growth, coupled with improving trade performance, has been buoying emerging Asia’s best-performing currency this year, while the local central bank is expected to stay pat on rates into 2025.
The ringgit has been appreciating against the greenback during the quarter after a rebound in exports and efforts by Bank Negara Malaysia to force state-linked companies to improve overseas investment incomes.
“A combination of further gains in the yuan, growth in the region looking fine, Fed easing cycle and softer dollar should continue to benefit Asian currencies,” said Christopher Wong, currency strategist at OCBC.
Equity markets in emerging Asia were mostly downbeat, with stocks in Kuala Lumpur and Jakarta falling 0.2% and 1.4%, respectively. Shares in Taiwan added 1.5%.
Data on Tuesday showed Taiwan’s export orders exceeded expectations in August as demand for chips used for artificial intelligence applications continued to climb.
Analysts at Bank of America expect robust AI investments to support Taiwan exports over the coming years.