BENGALURU: Most Asian currencies and stocks gained on Thursday, as the dollar weakened on softer-than-expected US inflation data, while the Federal Reserve signalled interest rates would be kept higher for longer and pushed out the start of cuts to December.
The South Korean won was among the top gainers in the region, advancing as much as 0.7%, helped by the benign US inflation print, while the Malaysian ringgit rose 0.3%.
Among equities, stocks in Seoul jumped 1.4% to hit their highest level since March 26, while Singapore and the Philippine benchmark indexes jumped 0.5% and 0.4%, respectively.
On Wednesday, data showed US consumer prices were unexpectedly flat in May, while the Fed held its rate and delayed the start of policy easing until possibly December.
Policymakers’ median projection of the number of rate cuts this year dropped to just one, from three in March, irking investors.
“We still see upside risks for the dollar index, given that we remain in an uncertain transitory period on inflation and markets may continue to be cautious,” analysts at Maybank said.
“The Fed staying higher for longer is also going to do no favours for Asian FX with dot plots now indicating only one cut this year.”
The Thai baht was down 0.1%, while stocks rose 0.2%.
“While the Bank of Thailand (BoT) kept its policy rate unchanged at 2.50% as anticipated, there was a shift in the vote split, with one dissenter calling for a 25 bp cut versus two at the last two meetings,” analysts at ANZ said.
“The vote split and policy messaging suggest the window for an easing pivot has narrowed. However, considering the rising political uncertainties and the potential implications for fiscal policy implementation… it is still too soon to rule out a rate cut this year.”
