* Korean won leads currency rally, up 0.4% vs dollar * Shanghai stocks outpace region with 0.6% advance * Fed rate cut odds hit 84%, dollar weakens further (Updates for afternoon trade) By Roushni Nair Aug 28 (Reuters) – Most Asian currencies rallied on Thursday on growing hopes for Federal Reserve rate cuts, with the Philippine peso advancing after the central bank delivered an anticipated interest rate cut, while signalling its easing cycle may be complete. The Philippine peso appreciated 0.3% to 56.96 against the U.S. dollar, after three sessions of losses, while the benchmark stock index lost more than 1%. “The peso strengthened following the BSP’s rate cut, which offered no dovish surprises beyond market expectations,” OCBC currency strategist Christopher Wong said. Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona emphasized the central bank still sees more significant risks to the inflation outlook than to economic output, and when asked whether the easing cycle has ended, said, “based on data, yes, it would be.” DBS senior economist Radhika Rao said one more reduction in the fourth quarter of 2025 is likely by BSP, as policymakers tap a period of soft inflation to take a more growth-supportive stance. The South Korean won led the currency rally, climbing 0.5% after the Bank of Korea held rates steady in a widely anticipated decision. Seoul’s Kospi index mirrored the currency strength, advancing 0.3%. The Thai baht, Philippine peso, and Malaysian ringgit advanced 0.2%, each. Equities showed broader momentum, with the benchmark indexes in Jakarta and Kuala Lumpur adding 0.6% and 0.2%, respectively. Shanghai’s composite index outpaced regional peers, jumping more than 1%. Meanwhile, traders amplified bets for a Fed rate cut next month after New York Fed President John Williams signalled a reduction was possible. The U.S. dollar index edged down 0.1%, in its third straight session of losses. The dollar has faced additional pressure this week from President Donald Trump’s intensified campaign to influence monetary policy, including his attempt to remove Fed Governor Lisa Cook and install a loyalist. Traders currently lay around 84% odds of a quarter-point rate cut next month, and have priced in a cumulative easing of 56 basis points by this year-end. BNP Paribas EM Asia FX strategist Parisha Saimbi said, “currencies that would be more sensitive to concerns of Fed independence would be those that hold larger unhedged U.S. asset exposure”, specifically China, South Korea, Taiwan, and Singapore in the Asian context. Separately, Asia-Pacific shares outside Japan fell 0.4% as concerns over Nvidia’s China outlook offset the AI giant’s strong earnings, pulling U.S. equity futures down in after-hours trading. HIGHLIGHTS: ** Thai July factory output drops 4% y/y ** China trade negotiator: ready to manage differences with Canada Asia stock indexes and currenc ies at 0726 GMT COUNTRY FX RIC FX FX INDE STOCKS STOCK DAILY YTD X DAILY S YTD % % % % Japan +0.05 +6.6 <.n2> China 4 EC> India +0.09 -2.2 <.ns ei=””> Indones +0.12 -1.5 <.jk ia=”” se=””> Malaysi +0.21 +5.8 <.kl a=”” se=””> Philipp +0.28 +1.9 <.ps i=”” ines=””> S.Korea 3 11> Singapo +0.09 +6.2 <.st i=”” re=””> Taiwan -0.01 +7.1 <.tw ii=””> Thailan +0.12 +5.9 <.se d=”” ti=””> 4 (Reporting by Roushni Nair in Bengaluru; Editing by Sonali Paul and Rashmi Aich) .ps> .n2>
