Asian currencies traded in a narrow range on Friday as stocks fell following data showing US inflation declined to a three-year low, maintaining expectations of a Federal Reserve rate cut in June.
Regional currencies remained muted through the week. The Philippine peso climbed 0.4 percent on the day, but was set for a 0.2 percent weekly fall, while the Thai baht was on track for a 0.5 percent gain for the week.
The Malaysian ringgit inched 0.1 percent higher, heading for a 0.8 percent increase for the week, its best weekly performance in two months.
The currency has edged away from the 26-year low it reached last week. The country’s finance ministry expects the ringgit to appreciate this year and has dismissed suggestions of adjusting monetary policy to prop up the currency, which has weakened by 3.2 percent in 2024.
Malaysia’s Prime Minister Anwar Ibrahim and central bank governor Abdul Rasheed Ghaffour have both said that they perceive the ringgit as undervalued and not reflective of the country’s strong fundamentals.
Second Finance Minister Amir Hamzah Azizan has said that the central bank has stepped up efforts to curb excessive movement in the ringgit’s value and encouraged firms to use the local currency for export settlements to reduce dependency on the dollar.
“We could see more relief for the ringgit by the middle of the year, but for now, I think the interest rate differential or disadvantage, could still work against the ringgit,” said Moh Siong Sim, FX strategist at Bank of Singapore.
Meanwhile, US personal consumer expenditures (PCE) price index data picked up in January in line with expectations, while annual inflation slipped to the lowest in three years, keeping the chances of a Fed rate cut by mid-year on the table.
Stocks in the region slipped as data from China, the world’s second-largest economy, showed manufacturing activity contracted for the fifth straight month in February, mounting pressure on policymakers to consider additional stimulus measures.
Shares in the Philippines reversed course to lose 0.4 percent after rising as much as 0.9 percent to their highest level in a year and were on track for their sixth straight weekly gain. – Reuters
