Thai baht slips, most Asian currencies subdued ahead of US CPI

BENGALURU (April 9): Thailand’s baht led losses among subdued Asian currencies on Tuesday, as traders exercised caution ahead of this week’s US inflation data and a flurry of regional central bank meetings.

The all-important US CPI data scheduled for release on Wednesday will take centre-stage for global markets, as bets on a US interest rate cut have gradually been diminishing.

Traders are now seeing about a 50% chance of the Fed cutting rates in June, as against near 60% from last week, according to the CME’s FedWatch tool.

In Asia, the baht lost as much as 0.4%. It is among the worst-performing currencies in the region, having slumped about 6.7% this year. Stocks, however, rose 0.8%.

The Bank of Thailand, which meets on Wednesday, is likely to stay pat on rates for the third consecutive meeting, a Reuters poll showed, in the midst of middling economic growth and rising pressure from the government to slash rates.

The Thai prime minister had said that the central bank should cut rates by at least a quarter of a point in the upcoming meeting.

Southeast Asia’s No.2 economy is set to announce a host of property measures on Tuesday, in a bid to revive growth.

“Actual growth performance this year (for Thailand) is likely to be below potential,” Goldman Sachs analysts wrote.

“With below-potential growth and low inflation, we continue to expect the Bank of Thailand to cut policy rates three times this year,” they added.

Central banks in Singapore and South Korea are also due to meet this week, with analysts expecting the banks’ policy stances to remain unchanged.

Among other Asian assets, the South Korean won and stocks traded marginally lower and down 0.3% respectively, ahead of legislative elections on Wednesday.

The Singapore dollar and the Malaysian ringgit were flat. However, the MSCI’s EM Asia Index rose as much as 0.8% to hit almost a month’s high.

Among Asian shares, stocks in Taiwan hit another record high, jumping as much as 1.7%, piggy-backing on Taiwan Semiconductor Manufacturing Company (TSMC) winning a US$6.6 billion subsidy for advanced semiconductor production in Phoenix, Arizona.

Equities in Singapore rose 0.7%, while those in Malaysia and China traded about 0.2% lower each.

Markets in the Philippines and Indonesia were closed due to public holidays.

Elsewhere, the Israel, shekel gained more than 2% on Monday, after the central bank held interest rates steady.