Asian currencies extend losses on US election bets; rupiah, ringgit lead declines

By Rajasik Mukherjee and Ayushman Ojha

Oct 23 (Reuters) –Asian currencies extended losses on Wednesday, led by the Indonesian rupiah and Malaysian ringgit as the dollar continued to strengthen on bets Donald Trump would win the U.S. presidential election, while stocks in the region were mixed.

Rising odds of Republican candidate Trump winning the Nov. 5 election have been pushing the dollar higher, while diminishing expectations for aggressive interest rate cuts by the U.S. Federal Reserve have also supported the greenback.

Malaysia’s ringgit MYR=, the best performing currency in the region, shed as much as 0.4%, hitting over a one-month low.

The Indonesian rupiah IDR= lost 0.4%, while the Singapore dollar SGD= and Taiwan dollar TWD= traded largely unchanged.

“If he (Trump) reiterates that he will be imposing prohibitive tariffs on Asia, then I think market expectations for higher tariffs will certainly continue to weigh on Asian currencies throughout the quarter and even going into early next year,” said Lloyd Chan, senior currency analyst at MUFG Bank.

In the forex markets, trading was thin as markets in Thailand were closed for a holiday while the Philippine central bank on Wednesday suspended currency trading and monetary operations for the day due to Tropical Storm Trami.

Stocks in the Asian emerging markets struggled for direction, as investors weighed the risks of U.S. election results.

South Korean stocks .KS11 gained 1.2% boosted by chip and auto makers, while shares in Taiwan .TWII lost 0.7%.

Indonesian stocks .JKSE edged lower while stocks in Malaysia .KLSE traded flat.

Traders will be watching out for Malaysia’s inflation report due on Thursday to gauge the central bank’s monetary policy. Data on Wednesday showed Singapore’s key consumer price gauge rose more than economists’ forecasts.

Singapore stocks .STI were up 0.5%, while stocks in Manila .PSI fell 0.8%.

Last week, the Philippine central bank reduced its key interest rate, while Bank Indonesia kept rates unchanged. Bank of Thailand, surprised markets with cut but indicated it was not the beginning of an easing cycle.

“Inflation in Asia has been less of a worry compared to some of the advanced economies in the U.S. and Europe, so what has been a constraint for Asian central banks (from cutting rates) is the weakness that we have been seeing in their currencies over the past several years,” Chan said.

“So for now central banks in the region will want to wait and see the U.S. election outcomes before deciding to take the next move.”

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Reporting by Rajasik Mukherjee & Ayushman Ojha in Bengaluru; Editing by Sonali Paul