(Updated)

Ringgit firms most in over one month, baht hit by bond outflows

Ringgit firms most in over one month, baht hit by bond outflows
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BENGALURU (Oct 20): The Malaysian ringgit firmed on Wednesday by its most in more than a month as Asian emerging currencies gained on signs that China's policymakers were moving to contain the nation's property sector woes, while bond outflows knocked the Thai baht.

Taiwan's dollar, the Indian rupee and South Korea's won firmed between 0.2% and 0.4% as the greenback retreated on improving risk appetite in the United States due to upbeat corporate earnings.

The positive mood saw US bonds declining further, with the 10-year Treasuries yield climbing to a five-month high of 1.673%.

"Drags on Asian emerging currencies from rising long-end US yields appear milder, with regional sentiments anchored somewhat by easing Covid-19 trajectories, reopening and signs of policy support from Chinese authorities," Maybank analysts wrote in a note.

The People's Bank of China injected 100 billion yuan (US$15.65 billion) into the banking system, as several analysts predicted more targeted easing measures would be rolled out in coming months to cushion the country's troubled real estate sector.

The Chinese yuan bounced to a four-month high of 6.379 versus the greenback before paring gains due to corporate dollar demand.

Alvin Tan, head of Asia FX strategy at RBC Capital Markets, said the currency was very likely to touch the 6.36 level hit in May.

Coming off a holiday, the ringgit rose 0.3%, extending its strong gains on the back of surging crude prices as Malaysia is a net oil exporter. The currency has firmed about 1.9% in the past two months.

The baht, Asia's worst performing currency so far this year, weakened 0.3% on persistent outflows from the bond market. Yields on the 10-year paper are up around 20 basis points to 2.09% this month alone.

Foreign investors are cutting their bond holdings amid concerns around higher debt supply after Thailand increased its public debt ceiling in September to fund fiscal deficit and Covid-19 spending, Barclays analysts wrote.

Stock markets in Asia were largely tepid, with Indian equities dragged down by metal stocks and South Korea's KOSPI closing 0.5% lower on profit-taking.

Financial markets in Indonesia were closed for a holiday.

Highlights

  • Singapore's 10-year benchmark yield is up 3.2 basis points at 1.752%
  • Malaysia's 3-year benchmark yield is up 2.90 basis points at 2.541%
  • In the Philippines, top index gainers are Bloomberry Resorts Corp, up 7.6%, and Converge Information & Communications Technology Solutions Inc, up 6%