Most emerging Asian currencies and equities ppsted weekly gains on Friday, as a slew of economic data from the US reinforced bets that the US Federal Reserve is done with rate hikes.
The Thai baht hit its biggest weekly gain since March 17, while the Indonesian rupiah hit its best week since Nov. 3. The Taiwan dollar posted its strongest weekly gains in a year.
The MSCI Asia ex-Japan equity index is up 2.8 percent so far this week. Thailand stocks were on track for their best week in two.
Indonesia’s rupiah climbed 0.3 percent while the South Korean won retreated 0.5 percent for the day.
Equities in Philippines climbed 0.3 percent while those in South Korea retreated 0.7 percent.
US economic data this week showed inflation slowing. This and other weak economic data have strengthened bets that the Federal Reserve is done hiking rates and will start rate cuts next year.
However, Barnabas Gan, acting group chief economist at RHB Singapore expects the central bank to raise its Fed Funds Rate (FFR) in its December policy meeting.
The implication of higher FFR in December is a stronger dollar, which means that the recent strengthening of Asia FX may be short-lived, with some Asian economies still facing pressure for hiking rates, Gan added.
In Asia, Taiwan dollar rose, boosted by prospects of an easing in cross-strait tensions after the two China-friendly main opposition parties agreed to make a decision on a joint presidential ticket for January’s elections.
The Taiwan dollar gained 0.6 percent while equities jumped 0.2 percent , their second consecutive daily gain since the decision by the main opposition Kuomintang (KMT) and the Taiwan People’s Party (TPP), which have vowed to renew talks with China.
DBS analysts said that if these two opposition parties won next year’s elections, that could enable an easing of cross-straits relations in 2024.
The Taiwan dollar rose 1.8 percent for the week.
China’s yuan was steady and was set for its biggest weekly gain since Sept. 15 after a meeting between the Chinese and US presidents eased concerns over geopolitical tensions.
Data from Singapore showed exports fell for a 13th straight month in October on a year-on-year basis. – Reuters
