Key points
Monday’s trading session saw Asian currencies under pressure as the dollar strengthened. The Thai baht fell by 0.7%, marking its worst drop in two weeks and heading towards its first monthly decline in six months.
See: USD/THB daily chart shows a recovery from a low of 32.138 in early October to the current level around 33.425 on the VT Markets app.
The Philippine peso, despite inching up slightly, is poised for its first monthly fall since May. The South Korean won slipped by 0.4%, while the Malaysian ringgit remained flat but has already lost almost 4% in October.
The rally in the dollar is largely being driven by Trump’s potential policies, which could keep interest rates high in the US, a situation that favours the dollar but weighs heavily on the currencies of its trading partners.
As we move closer to the US election in November, this trend may intensify, especially if Trump’s poll numbers continue to climb.
The region’s central banks have begun easing monetary policy to counter these pressures. Last week, the Bank of Thailand unexpectedly cut its key interest rate, joining the Philippines in lowering rates.
However, Bank Negara Malaysia has so far remained on the sidelines.
See also: U.S. Labour Data Lifts Dollar & Asian Stocks
Over in Indonesia, President Prabowo Subianto’s cabinet appointment marked the reappointment of Sri Mulyani Indrawati as finance minister.
This should support the country’s bond market and the rupiah in the near term, although stock market reactions are mixed as traders await details on Prabowo’s policy direction.
Indonesian shares gained 0.3%, while the rupiah slid 0.2%.
Market participants now shift their focus to upcoming inflation data from Malaysia and Singapore later in the week, with any surprises likely to influence regional currencies and equity markets.
As the US election draws closer and economic data releases become pivotal, we may see more volatility across the region.
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