Asia currencies mixed as markets mull future Fed rate stance

Asia currencies mixed as markets mull future Fed rate stance
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(Nov 14): Emerging Asian currencies were mixed on Monday (Nov 14) and several regional stock markets eased after sharp gains in the previous session, as investors weighed the likelihood of the US Federal Reserve softening its hawkish monetary policy.

The Indonesian rupiah, Philippine peso and South Korean won lost between 0.2% and 0.6%, while the Singapore dollar also inched lower.

The US dollar steadied after Federal Reserve Governor Christopher Waller said on Sunday the bank was not softening its fight against inflation, which made some investors think that the steep sell-off last week was probably overdone.

Still, Malaysia's ringgit outperformed its peers to rise 0.9%, adding to Friday's 1.6% surge that came after data showed the Malaysian economy had expanded at its fastest pace in more than a year in the third quarter.

Thailand's baht was also an outlier, gaining 0.4%, as the Bank of Thailand (BOT) said monetary policy would be "measured and gradual" to support economic recovery, but that it was ready to adjust those settings if necessary.

"I do agree on the BOT stance ... considering the economy, which has not fully recovered yet compared to pre-Covid-19 level," said Kittika Boonsrang, capital markets business research specialist at Kasikornbank.

"BOT may not need to rush as the wind is changing its direction, with rising concern on over-tightening as inflation is falling back under control."

Meanwhile, in China, the yuan hit a near two-month high and stocks jumped 0.8% on the government's decision to ease some Covid-19 restrictions and as regulators outlined an aggressive plan to shore up liquidity in the property sector.

Regional share markets were mixed, after a rally on Friday in the aftermath of softer-than-expected US inflation data.

While equities in Singapore and the Philippines gained over a percent, stocks in Indonesia, Malaysia and Thailand skidded between 0.4% and 0.9%.

Indonesia's trade surplus is seen narrowing slightly in October to US$4.5 billion amid weakening in global trade and moderating commodity prices, a Reuters poll showed.