Most Asian currencies rose on Thursday (Sept 8) in cautious trade as investors awaited a speech by US Federal Reserve Chair Jerome Powell, while the Malaysian ringgit steadied ahead of an expected rate hike by the country's central bank.
The Indian rupee rose 0.3% and was eyeing its best session in a week. The Malaysian ringgit and Indonesian rupiah inched nearly 0.1% higher.
Even though most Asian currencies steadied on Thursday, bearish bets on them hit a record high due to a resurgent US dollar and weakness in the yuan amid worsening Covid-19 lockdowns in China, a Reuters poll found.
However, "the negative reaction from the US dollar and US Treasury yields may provide some comfort in suggesting that markets may be getting more accustomed to the higher-for-longer rate narrative", said Yeap Jun Rong at IG.
Powell will participate in a discussion at a Cato Institute conference, where the rhetoric on rate hikes would remain hawkish overall.
Malaysia's central bank, Bank Negara Malaysia (BNM), will meet later in the day and is expected to hike its key rate by another 25 basis points to curb price pressures.
Although Malaysian inflation surpassed the BNM's target range, it is still relatively moderate compared with other Southeast Asian countries, allowing the central bank to move at a slower pace.
"Much focus will be on any guidance on the path ahead. While inflation is likely to remain a concern, the BNM might start to pay more heed to slower global growth momentum," analysts at OCBC Bank observed.
Equities in Asia rallied after tracking gains on the Wall Street as benchmark US Treasury yields eased, while oil prices steadied at levels not seen since before Russia's invasion of Ukraine.
Equities in Singapore and Indonesia rose 0.9% each to lead gains among its peers, followed by the Philippines stocks, which climbed 0.6%. Stocks in Malaysia and Thailand also rose.
Oil prices settled below US$90 — something only seen prior to Russia's invasion of Ukraine in late February — as downbeat trade data from top consumer China fed investor worries about recession risks.
China's weak economic data and stringent zero-Covid policy added to demand concerns. Its crude oil imports in August fell 9.4% from a year earlier, customs data showed.