(Oct 25): The Philippine peso and Thailand’s baht led declines among Asian currencies on Friday adding to recent losses on bets the US Federal Reserve will slow rate cuts, while regional stocks were mixed on uncertainty about the Nov 5 US election outcome.
The peso fell 0.6% to 58.27 per US dollar, a level last seen on Aug 2, while the rupiah was down 0.4% by 0345 GMT. The Singapore dollar, Malaysian ringgit, and South Korean won all fell between 0.1% and 0.3%.
The dollar index edged up 0.04% to 104.09, after reaching a three-month high of 104.57 earlier this week. The index is on track for a 3.6% gain since the week ending Sept 23, and poised to record its strongest weekly performance since Sept 30.
The greenback is strengthening as investors revise their expectations away from a significant Federal Reserve rate cut and factor in the potential for a second presidency for Republican Donald Trump, who has promised high tariffs and tax cuts. Those policies would stoke inflation and slow rate cuts, and could affect trading partners’ currencies.
The market was completely pricing in a cut of at least 25 bps a month ago, with a 58.2% chance of a 50 bps cut, according to CME’s FedWatch Tool.
“As the US elections approach and Trump trades are being implemented, the dollar is likely to remain on the front foot and US rates likely to remain elevated, creating a somewhat painful backdrop for EM assets,” analysts at Barclays wrote.
Meanwhile, the rupiah has fallen by 1% so far this week, set for its worst week since Sept 30.
However, the reappointment of Sri Mulyani Indrawati as the finance minister on Oct 21 under newly sworn-in President Prabowo Subianto — her third consecutive presidential administration — signals policy continuity and stability to investors, allaying earlier concerns about her potential absence from the new government.
In Thailand, the baht has fallen nearly 1.5% so far this week in holiday-thinned trade.
Bank of Thailand deputy governor Piti Disyatat, in an interview with Reuters, said Thailand’s low and well-anchored inflation poses no risk of deflation and the economy is converging to trend growth. He reiterated that the central bank’s rate cut last week was not the start of an easing cycle.
Among Asian equities, stocks in Bangkok were flat on Friday but were on track for their worst week since mid-April, having lost nearly 2%. Singapore equities fell 0.5% and were set for their biggest weekly loss since early August.
Uploaded by Magessan Varatharaja
