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Indonesian rupiah, Philippine peso top Asian forex losers

May 29, 2024

Key points:

  • Indonesia rupiah hits weakest since early May
  • Most Asian equities in the red
  • Vietnam’s annual inflation accelerates

The Indonesian rupiah and the Philippine peso were the biggest losers among Asian currencies on Wednesday. The upward movement in U.S. benchmark Treasury yields boosted the dollar, making investors cautious about an impending inflation report that could shape global monetary policy.

Asian currencies set for monthly losses on strong U.S. data

Asian currencies, in general, were on track for monthly losses. This was due to robust economic data from the U.S. which reduced the likelihood of rate cuts. The rupiah fell as much as 0.5%, trading at 16,165 per dollar, marking its lowest point since May 2. Simultaneously, the benchmark 10-year Treasury yield inched up to a two-week high of 6.943%.

Chart showing the USD/IDR exchange rate with key indicators and trends on VT Markets, a forex CFDs brokerage. The graph highlights the Indonesian rupiah's decline against the US dollar, reflecting the currency's performance amidst robust US economic data and rising Treasury yields. The image illustrates the rupiah trading at 16,165 per dollar, marking its lowest point since May 2, as the benchmark 10-year Treasury yield increases to a two-week high of 6.943%.

Picture: Indonesian rupiah trading at 16163.4 on VT Markets app.

The Philippine peso also declined by about 0.5%, hovering near last week’s low. Other currencies, such as the Singapore dollar, Malaysian ringgit, Taiwan dollar, and Thai baht, saw declines ranging from flat to 0.4%.

Federal Reserve’s key inflation gauge in focus

The personal consumption expenditures (PCE) reading on Friday, the Federal Reserve’s preferred inflation gauge, is the key focus for investors. This reading is expected to remain steady on a monthly basis and will influence the Fed’s future interest rate decisions.

Asian equities mirrored the weak performance of their currencies. In Seoul, the KOSPI index fell about 1.3%, while indexes in Jakarta, Kuala Lumpur, Manila, and Bangkok dropped between 0.3% and 1.4%. Taipei’s chip-heavy TAIEX index, which recently hit multiple record highs, retreated by about 0.6%.

In contrast, Chinese stocks saw a modest rise of 0.3%, bucking the overall trend. Meanwhile, Vietnam’s annual inflation rate accelerated to 4.44% in May, nearing the government’s target ceiling of 4.5% for the year.

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