September 26, 2019 / 7:16 AM / a month ago

Most Asian currencies edge up, ringgit on back foot

(Reuters) - Most Asian currencies inched higher on Thursday, with investors cautiously optimistic after U.S. President Donald Trump hinted the United States and China could resolve their trade differences soon.

A customer hands a 50-Indian rupee note to an attendant at a fuel station in Ahmedabad, October 5, 2018. REUTERS/Amit Dave/File Photo

Trump said that a trade deal with China could happen sooner than people think saying the two biggest economies are having “good conversations.” The president’s recent remarks come after he delivered a stinging rebuke to China’s trade practices and said he would not accept a “bad deal”.

While Trump’s comments helped sentiment, Asian currencies traded in a thin range as investors remained apprehensive.

“Considering the fact that a rapid deterioration in U.S.-China relations is not without precedence, investors will continue scouring the horizon for any signals that can push risk sentiment either way,” Han Tan, market analyst at FXTM, said in a note.

Meanwhile, the Thai baht slipped 0.3% to 30.590. The Bank of Thailand left benchmark interest rates unchanged on Wednesday but cut its 2019 economic growth forecast to 2.8% from 3.3% seen in June, and forecast exports will shrink this year.

The economy has been plagued by below-target inflation, risks to financial stability and sagging growth alongside a strengthening baht, which has led policymakers to roll out stimulus measures to shore up growth.

On the other hand, the Philippine central bank is expected to cut rates by 25 basis points later on Thursday, marking its third rate cut this year. The Philippine peso firmed marginally ahead of the decision.

The archipelago’s central bank lowered its average inflation forecast for 2019 to 2.5% on Wednesday, down from the previous projection of 2.6%.

FTSE RUSSELL DECISION AWAITED

In Malaysia, the focus is on the FTSE Russell’s decision later in the day on whether it will keep Malaysian government bonds on its global bond index. The ringgit slipped 0.1% against the dollar ahead of the announcement.

The review was initiated due to concerns about market liquidity.

“Hopes are pinned on the liquidity boosting measures by the BNM to satisfy the index provider,” Prakash Sakpal an economist, at ING wrote in a note.

Southeast Asia’s third-largest economy loosened currency hedging rules in August to help boost liquidity.

In April, a Morgan Stanley research note said that the country would see outflows of $8 billion if its bonds are downgraded after the review.

Malaysia’s current weight in the index is 0.39%.

Reporting by Shreya Mariam Job in Bengaluru; Editing by Jacqueline Wong

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