(April 5): Emerging Asian currencies were largely range-bound on Friday, although on track for weekly losses, as hawkish comments by some Federal Reserve officials tempered expectations of impending rate cuts and dampened risk sentiment.
The Philippine peso weakened 0.4%, touching a five-month low after data showed annual inflation came in at 3.7% last month due to higher food prices.
The Bangko Sentral ng Pilipinas (BSP) will meet on Monday for a monetary policy decision, kicking off a new round of Asian central bank meetings this month. The BSP is likely to keep its key rates on hold until at least the third quarter, according to a Reuters poll.
The South Korean won, which eased 0.4%, was one of the region’s top laggards. The Thai baht dipped 0.1%, standing at its lowest level since Oct 10.
Both won and baht were poised for their fourth weekly losses.
Earlier on Friday, Thailand’s commerce ministry said inflation dropped for a sixth straight month in March, but was still outside the central bank’s target range.
A slide in US Treasury yields on Thursday failed to lift assets in Asia, as several Fed officials struck a cautious tone on easing monetary policy. The benchmark 10-year bond yield was last at 4.3215%.
Softer US Treasury yields should not be mistaken for emerging market asset and currency buoyancy, said Vishnu Varathan, head of Asia economics and strategy, Mizuho.
“Quite the opposite given the conspiracy of hawkish Fed and geo-political threat,” he said.
The US dollar index was last up 0.2% at 104.34, but “due for some near-term consolidation,” according to Barclays analysts.
In equities, the Philippine benchmark index skid 1.2% to its lowest level in nearly two months. Stocks in South Korea dropped 1% while those in Singapore were down 0.5%.
In Indonesia, shares advanced 0.4%. The rupiah was last up 0.3%, hovering under the 15,900 mark against the dollar.
Short positions on the Indonesian rupiah strengthened to their highest since Nov 2 on account of a sturdy dollar and uncertainty surrounding the timing of US rate cuts, a Reuters poll showed on Thursday.
Barclays analysts said they expect Bank Indonesia (BI) to hike its policy rate by 25 basis points to 6.25% if the rupiah’s recent move toward the psychologically important 16,000-per-dollar level is sustained all the way through to the next policy meeting on April 24.
The Reserve Bank of India held its policy rate unchanged on Friday as economic growth remained robust.
The Indian rupee edged higher against the dollar at 83.4050, just above a record low hit in the previous session, as markets assessed the central bank’s decision.
Markets in China and Taiwan were closed for public holidays.
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