Asian currencies flat as traders await clarity on interest rate

Asian currencies remained flat on Thursday as traders awaited clarity on global interest rate trends, while Indonesia's stock market witnessed a surge to another record high.

The Jakarta index marked its fifth consecutive daily gain, advancing as much as 0.5 per cent to fresh heights. The optimism stems from sustained equity inflows into Indonesia's benchmark indexes and the recent presidential election victory of Prabowo Subianto, promising policy stability.

Foreign investors have injected approximately $1.1 billion into Indonesian equities in the first two months of the year, with Wednesday witnessing the largest single-day investment since April 20, 2015, according to LSEG data.

Globally, investors are closely monitoring various US economic indicators, including retail sales, ahead of the Federal Reserve's policy meeting next week. The anticipation surrounds the possibility of interest rate adjustments.

Market expectations for a rate cut in June have slightly decreased to 65 per cent, down from 71 per cent earlier in the week, following a US CPI report that exceeded forecasts, tempering expectations for imminent reductions, according to the CME FedWatch Tool.

Amid these developments, Maybank suggests viewing fluctuations in US dollar as selling opportunities, anticipating a gradual weakening of the greenback.

In Asia, most currencies remained flat, with slight declines observed in the South Korean won and the Taiwan dollar. Meanwhile, stocks in Bangkok and Mumbai rose, while Manila experienced a minor dip.

Seoul stocks surged to their highest level since April 2022, following announcements of accelerated corporate reform measures. Singapore shares also climbed, despite Singapore Telecommunications facing setbacks in its negotiations to sell a stake in Australian telco Optus.

(With Reuters inputs)