Taiwan stocks hit record high; Asian currencies weaken

By Poonam Behura

April 2 (Reuters) –Stocks in Taiwan surged to a record high amid higher inflows into Asian equities on Tuesday, while most regional currencies weakened against the dollar as strong economic data reinforced bets against earlier U.S. rate cuts.

Taiwan’s benchmark index .TWII rose 1% to a record high of 20,451.790 points. The Philippine main shares index .PSI jumped 1%, hitting its highest level since Jan. 27, 2023.

“In Taiwan and South Korea, the equity markets are very tech focused and a global equity bull market has been driven by the tech sector particularly in Taiwan and Korea,” said Alvin Tan, who heads Asia FX strategy at RBC Capital Markets.

“But that’s obviously not helping Taiwan dollar or even the South Korean won and that’s because the U.S. dollar is basically strong right across the board,” Tan noted.

Traders dialled back expectations of Federal Reserve rate-cuts after data on Monday showed U.S. manufacturing grew for the first time in 1-1/2 years last month due to a production rebound and increased new orders.

The robust data sent the benchmark U.S. 10-year Treasury yield US10YT=RR to as high as 4.337%, its strongest level since March 18. US/

This underpinned the U.S. dollar’s climb on Tuesday. The index .DXY that measures the strength of greenback against rival currencies rose by 0.3% to 105.02.

Meanwhile, the MSCI index for emerging markets currencies .MIEM00000CUS fell by 0.3%.

In Asia, the Taiwanese dollar TWD=TP depreciated 0.3% to its lowest since Nov 16. The Malaysian ringgit MYR= slipped 0.4% to a four-week low. The South Korean won KRW=KFTC also dipped 0.2% and touched its lowest level in five months.

Consumer prices in South Korea last month rose 3.1%, matching market expectations and the previous month’s pace.

An official at Bank Indonesia said the central bank continued to intervene in the foreign exchange market to stabilise the currency, after the rupiah IDR= declined again on Tuesday. It was last down 0.3%, at a level not seen since October 2023.

The country’s benchmark index .JKSE also fell 0.5%, a day after data showed annual inflation in March rose at the quickest pace in seven months.

“Bank Indonesia will likely remain vigilant, in view of uncertainty on the timing of Fed rate cuts, a narrowing trade surplus and rising domestic inflation,” Maybank analysts said in a client note.

Investors are on the lookout for inflation data from the Philippines on Friday, an important metric for central banks in setting the tone for their monetary policies.

HIGHLIGHTS:

** Japan warns of action against excessive yen volatility

** Chinese state banks sell dollars as yuan hits 4-1/2-month low, sources say

** Pakistan annual CPI gauge drops to 20.7% in March, data shows

Reporting by Poonam Behura in Bengaluru; Editing by Jamie Freed