Most Asian currencies firmed on Wednesday as reports of headway in Sino-U.S. trade talks and easing U.S. bond yields prompted buying of regional risk assets.
The Financial Times reported that top officials from Washington and Beijing had resolved most of the issues standing in the way of an agreement.
Lower U.S. Treasury yields, plus a slightly weaker dollar and yen, also encouraged stronger risk appetites in Asia.
Gao Qi, a forex strategist at Scotiabank, said that given the fears of a global economic slowdown, regional currencies are likely to have near-term gains from reflation policies by major central banks, which could mean “continued portfolio inflows to EM Asia”.
The Philippine peso was Wednesday’s biggest gainer, adding as much as 0.63 percent against the dollar to 52.110, its strongest level since March 12.
The central banks of Thailand, Indonesia, Malaysia and the Philippines on Friday will sign an agreement on cooperation to promote trade and investment through local currencies, in a bid to trim exposure to volatile global markets.
The Thai baht was largely flat against the dollar
Minutes of the March 20 central bank meeting, released on Wednesday, showed that any further policy tightening would be gradual and dependent on economic performance.
In December, the Bank of Thailand raised its benchmark rate for the first time in more than seven years, by 25 basis points to 1.75 percent.
The Chinese yuan traded about 0.21 percent higher. The currency, which has been especially sensitive to any news from the trade front, lost more than 5 percent in 2018 due to trade tensions with the U.S.
Indonesian markets were closed on Wednesday for a public holiday.
The Indian rupee rose as much as 0.46 percent to a two-week high against the dollar, ahead of a central bank interest rate decision on Thursday.
The Reserve Bank of India is likely to cut by 25 basis points, though some analysts believing the country’s weakening economic growth and subdued inflation outlook warrant a larger reduction.
A Reuters poll saw more than 85 percent of respondents expecting a cut.
Thai baht becoming the region’s worst-hit currency in COVID pandemic
According to data from its tourism ministry as well as the World Bank, Thailand had only a little over 34,000 tourist arrivals as of May 2021, compared with over 39 million in 2019, before the pandemic. Fewer tourists also means lower demand for the Thai baht.
3 Reasons to Be Optimistic About the Baht Right Now
Probably one of the most important factors for the rise of the Baht is the continued weakness of the US dollar, which most experts agree is going to continue declining throughout the rest of the year.
The Thai Baht, our beleaguered currency, has had something of a difficult few years. Successful debt and inflation crises have eroded the value of the Baht numerous times, not least the events of 2015-16, which saw the Baht plunge to some of the lowest levels against the Dollar in history.(more…)
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