Asian currencies waver as equities decline; focus on US CPI data

Asian currencies navigated a mixed trajectory on Monday as equities faced downward pressure, with investors scrutinising inflation indicators amidst speculation of potential Federal Reserve actions.

Following the release of the monthly US payrolls data late last Friday, which depicted accelerated job growth in February alongside a two-year high in unemployment, market participants contemplated the likelihood of a Federal Reserve rate cut in June.

Attention now shifts to the awaited US Consumer Price Inflation (CPI) data scheduled for late Tuesday, marking a significant point of interest in an otherwise light data week. According to the CME FedWatch tool, the probability of a US rate cut in June stands at approximately 73 per cent, up from 64.3 per cent the previous week.

The dollar index, gauging the greenback against six major currencies, steadied at 102.73.

Across Asia, Thailand baht and Taiwan dollar reversed early losses to stabilise, while currencies such as the Singapore dollar, Indian rupee, and Malaysian ringgit traded relatively unchanged to marginally higher levels, with the ringgit hovering close to a 26-year low.

Conversely, the South Korean won surged 0.7 per cent, reaching a two-month high, while the Philippine peso rose approximately 0.2 per cent to hit a similar milestone.

Analysts from Sumitomo Mitsui Banking Corp noted that external market dynamics would continue to influence Asian currencies, especially if the prevailing sentiment regarding the Federal Reserve remains unchanged and incoming US data reinforce this stance.

Meanwhile, China reported a consumer price increase for the first time in six months for February, amidst ongoing challenges posed by a prolonged property crisis, which has dampened consumer sentiment and demand.

Meanwhile, Asian shares in Manila, Singapore, Seoul, and Mumbai witnessed declines ranging from 0.2 per cent to 1.2 per cent, although Kuala Lumpur managed to gain 0.3 per cent. Taiwan equities, which recently achieved multiple record highs driven by enthusiasm in artificial intelligence stocks, retreated modestly by about 0.3 per cent.

Indonesian markets remained closed on Monday due to a public holiday.

(With Reuters inputs)