(Jan 19): Most Asian currencies were set to weaken against the dollar for the week as upbeat economic indicators reduced expectations of a US Federal Reserve rate cut in March, strengthening the greenback.
In Taiwan, stocks and the currency got a boost from a risk-on rally in the world’s largest contract chipmaker Taiwan Semiconductor Manufacturing (TSMC) on Friday, while a shift in investor focus away from post-election turbulence further aided the sentiment.
The Taiwan dollar marked its biggest daily gain since late December, appreciating 0.5%, while the main stocks index clocked its best day since early November, rising 2.6% on the back of a 6% jump in TSMC.
The Taiwan dollar, however, was on track to register a nearly 1% loss for the week, to mark its third consecutive week in the red, as post-election turbulence and geopolitical tensions with China exerted pressure on the currency earlier in the week.
“Anxiety regarding Northeast Asia geopolitical risks should ease to the relief of the TWD (Taiwan dollar), as China’s reaction to the Taiwan election result has been measured,” analysts at Bank of Singapore said.
“The market is likely to shift focus back to fundamental factors of a better semiconductor industry outlook and lower global yields, which is more likely to increase foreign flows and be supportive for the TWD over the medium term.”
Meanwhile, the South Korean won firmed up to 0.5% earlier in the day but later gave up those gains to remain flat.
For the week, it was set to end nearly 2% lower.
Stocks in Seoul surged as much as 1.6% for the day, but were headed for their third consecutive weekly loss of over 2%.
In Singapore, the dollar ticked higher and shares advanced 0.5%.
Other regional currencies such as the Indonesian rupiah, Thai baht, Malaysian ringgit, and theIndian rupee slipped, and were poised to end the week in the red.
Equities in Thailand, Malaysia, and India advanced between 0.4% and 0.7%, while those in Indonesia were largely flat. Most regional benchmark indexes posted weekly losses.
Meanwhile, advance estimates showed the Malaysian economy likely posted faster growth in the December quarter from the prior three months, with the annual growth expected to be at 3.8%, below the government’s projection of a 4% expansion.
Next week, Bank Negara Malaysia will meet for the first time this year to discuss monetary policy. Analysts widely expect that the central bank will leave its policy rate unchanged.
