Asian FX tepid, stocks down after soft US inflation

EMERGING MARKETS-Asian FX tepid, stocks down after soft US inflation

Updates at 0745 GMT

By Ayushman Ojha

March 1 (Reuters) –Asian currencies traded in a narrowrange on Friday asstocks fell following data showing U.S. inflation declined to athree-year low, maintaining expectationsof a FederalReserve rate cut inJune.

Regional currencies remained muted through the week. The Philippine peso PHP= climbed 0.4% on the day, but was set fora 0.2% weekly fall, while the Thai baht THB=TH was on track for a0.5% gain forthe week.

The Malaysian ringgit MYR= inched 0.1% higher, heading fora 0.8% increase for the week, its best weekly performance intwo months.

The currency has edged away from the 26-year low it reached last week. The country’s finance ministry expects the ringgit to appreciate this year and has dismissedsuggestions of adjusting monetary policyto prop up the currency, which has weakened by 3.2% in 2024.

Malaysia’s Prime Minister Anwar Ibrahim and central bank governor Abdul Rasheed Ghaffour have both said that they perceive theringgit as undervalued and not reflective of the country’s strong fundamentals.

Second Finance Minister Amir Hamzah Azizan has said that thecentral bank has stepped up efforts to curb excessive movement in the ringgit’s value and encouraged firms to use the localcurrency for export settlements to reduce dependency on the dollar.

“We could see more relief for the ringgit by the middle of the year, but for now, I think the interest rate differential or disadvantage, could still work against the ringgit,” said Moh Siong Sim, FX strategist at Bank of Singapore.

Meanwhile, U.S. personal consumer expenditures (PCE) price index data picked up in January in line with expectations, while annual inflation slipped to the lowest in three years, keeping the chances of a Fed rate cut by mid-year on the table.

Stocks in the region slipped asdata from China, the world’s second-largest economy,showed manufacturing activity contracted for thefifth straight month in February, mounting pressureon policymakers to consider additional stimulusmeasures.

Shares in the Philippines .PSI reversed course to lose 0.4% after risingas much as 0.9% to their highest level in a year and were on track for their sixth straight weekly gain.

Malaysian stocks .KLSE dropped as much as 0.9%, while Thailand stocks .SETI lost 0.5% on the day.

Stocks in Indonesia .JKSE fell asmuch as 0.6%, while the rupiahIDR= gained 0.1%.

Indonesia’s inflation rate was at 2.75% in February, above expectations, while core inflation was unchanged from the month before and below market’s prediction.

The country’s annual inflation rate has stayed within the central bank’s target range since mid-2023, following a 250 basis points increase in interest rates by the BankIndonesia between August 2022 and October 2023.

“While the inflation is still well behaved, the Bank Indonesia’s policy decision in terms of when to ease will still be dependent on the Fed itself,” Bank of Singapore’s Sim added.

HIGHLIGHTS:

** Thai central bank chief: rate cuts will not help economy

** China’s new home prices rise at slower pace in February, survey shows

** India’s factory growth at five-month high in February, cost pressures cool

Asia stock indexes and currencies at 0745 GMT
COUNTRY	FX RIC	FX DAILY %	FX YTD %	INDEX	STOCKS DAILY %	STOCKS YTD %
Japan	JPY=	-0.30	-6.23	.N225	#VALUE!	#VALUE!
China	CNY=CFXS	-0.14	-1.39	.SSEC	0.39	1.75
India	INR=IN	+0.05	+0.40	.NSEI	1.45	2.63
Indonesia	IDR=	+0.10	-1.91	.JKSE	-0.38	0.22
Malaysia	MYR=	+0.08	-3.12	.KLSE	-0.85	5.75
Philippines	PHP=	+0.36	-1.09	.PSI	-0.36	7.28
S.Korea	KRW=KFTC	+0.16	-3.27	.KS11	-0.37	-0.49
Singapore	SGD=	-0.02	-1.99	.STI	-0.04	-3.07
Taiwan	TWD=TP	-0.11	-2.77	.TWII	-0.16	5.61
Thailand	THB=TH	-0.06	-4.85	.SETI	0.21	-2.99

Reporting by Ayushman Ojha in Bengaluru. Editing by Sam Holmes and Dhanya Ann Thoppil