Asian currencies dip: Ahead of the release of crucial US inflation data, most Asian currencies experienced a dip, with the Thai baht being the most affected. Traders were cautious, refraining from making major moves as they awaited the report, which could influence the Federal Reserve's decisions on interest rates. There's anticipation of a 0.4 per cent monthly increase in the consumer price index, with any unexpected rise potentially prompting investors to retreat from riskier assets.

Fed rate expectations

A Reuters survey indicated expectations of a rate cut by the Fed in June. At 0410 GMT, the dollar index stood at 102.82, reflecting its strength against six major counterparts. In Asian trading, the Thai baht and the Taiwan dollar saw declines, while the Philippines peso also slipped slightly, partly due to a widening trade deficit.

According to MUFG's FX strategist Michael Wan, despite recent performance, the Philippine peso is anticipated to underperform throughout 2024 due to its large current account deficit and unattractive FX valuations. Year-to-date, the peso has remained flat, while the Indian rupee is the only emerging Asian currency trading positively, having gained approximately 0.6 per cent.

Meanwhile, currencies like the Singapore dollar, Malaysian ringgit, and South Korean won traded steadily. In other developments, Argentina, amidst an ongoing economic crisis, reduced its interest rates from 100 per cent to 80 per cent, with its peso trading at 848.00 per dollar.

Gains across Asia

In Asian stock markets, most indices recorded gains, with Seoul, Kuala Lumpur, Manila, and Singapore stocks rising between 0.2 per cent and 0.4 per cent. Taiwan shares saw a notable increase of about 0.9 per cent, nearing a recent record high driven by enthusiasm for global artificial intelligence stocks. Analysts from Barclays suggested that while the AI trend is boosting tech sectors in Korea and Taiwan, its impact on Southeast Asian economies, which primarily provide downstream services for legacy chip production, might be limited.

Indonesia's markets remained closed for a public holiday.

(With Reuters Inputs)