BENGALURU (Aug 26): Most emerging Asian assets rallied on Monday, with the Indonesian rupiah and Malaysian ringgit leading the charge, after Federal Reserve chair Jerome Powell all but confirmed that the US central bank would opt for a rate cut next month.
The Indonesian rupiah strengthened as much as 1.3% against the greenback to hit its highest since early September 2023, while stocks in Jakarta added as much as 0.9% to hit a record high.
The Malaysian ringgit, the region’s best performer yet this year, jumped as much as 0.8% to its highest mid-February 2023 level, while the benchmark advanced 0.1%.
Last week, Powell hinted that the world’s most influential central bank would pivot towards a rate cut in September, sending the dollar lower.
“Powell’s ‘time has come’ keynote speech last Friday at Jackson Hole gave markets greater conviction to put on risks while selling the USD,” said Christopher Wong, currency strategist at OCBC.
In Asia, however, domestic concerns and external factors may prompt some central banks in emerging markets (excluding China) to delay monetary easing, Barclays analysts wrote in a note.
“Country-specific factors, be it financial stability risks (South Korea) or inflation (India) or the currency (Indonesia), provide more reasons to push back on policy easing,” it said.
The Indonesian and Thai central banks held interest rates steady last week, while the Philippine central bank cut its key interest rate this month for the first time in nearly four years.
Next week, Malaysia’s central bank is set to announce its overnight policy rate, having held rates steady since May 2023, after delivering a cumulative 125 basis points in hikes over the previous year.
“Bank Negara Malaysia likely to keep rates on hold can also be giving the ringgit support, at a time when we talk about easing elsewhere about the Fed and globally,” Maybank analysts said in a note.
Elsewhere in the region, South Korea’s currency inched 0.1% higher, while the stocks benchmark shed 0.3%, hit by losses in chipmaking giant Samsung Electronics.
Taiwan’s dollar strengthened 0.5%, while its stocks gained 0.6%. The Thai baht slipped 0.3%, while equities in Bangkok inched up 0.1%.
Markets in the Philippines were closed for a holiday on Monday.
Highlights
- Thai employment falls 0.4% year-on-year in 2Q with farm jobs down.
- World Bank forecasts Vietnam’s 2024 gross domestic product (GDP) growth at 6.1%, warns on bad loans.
- China central bank rolls over maturing loans, injects cash.
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Asian currencies and stocks at 0450 GMT
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Uploaded by Liza Shireen Koshy
