BANGKOK, March 25 (Reuters): The Indian rupee and the Thai baht led gains among Asian currencies on Friday, supported by a weaker US dollar and as crude prices dipped after the United States and allies considered releasing oil reserves.
However, most regional currencies were still set to post declines for the week on the growing likelihood of aggressive US interest rate hikes and the Russia-Ukraine conflict that has made investors risk averse.
Investors over the week were also wary of oil importing nations, such as Thailand and India, which could suffer if Western economic sanctions were to hit Russian oil exports more severely. Oil prices were set to mark their first weekly gain in three.
The Indian rupee firmed 0.3%, while the baht appreciated nearly 0.5% on Friday. However, both the currencies were set to post a loss of 0.5% for the week, with the baht eyeing its fifth weekly loss in a row.
"Effects of higher oil prices on imports and slowing global growth on exports will become visible over the coming months and should lead to larger trade deficits (in Thailand)," analysts at Barclays said in a note.
The Bank of Thailand was widely expected to leave its policy rate unchanged at 0.5%, where it has been since May 2020, when its policymakers meet next week.
Meanwhile, the Indian rupee, which is trading at 76.15 per dollar, might see its equilibrium slide gradually on a depreciating path towards 77, analysts at DBS Bank said in a note.
The rupee had tested a record low of 77 per dollar earlier this month. Equities in the region were hemmed into a range on Friday, and were broadly set to post a weekly gain as expectations of upsized rate hikes led investors to exit bond markets and put money into equities.
Shares in Indonesia, Malaysia, the Philippines and Thailand were chasing gains of between 0.3% and 0.9% for the week.
Singapore's Straits Times index was eyeing a 2.5% weekly gain, its third in a row, buoyed by the easing of Covid-19 restrictions in the city-state. Regional bond markets stabilised on Friday.
Indonesia's 10-year yields, among the top-yielders in the region, slipped to 6.711%, their lowest level since March 14.
"The global condition isn't conducive enough (for Indonesian bonds) due to persisting pressures from both the geopolitical conflict in Ukraine and the Fed's more aggressive measures on its tightening monetary policy," Maybank analysts said.
"We expect investors to take momentum for applying 'buy on weakness' strategy for the rupiah bonds, especially for benchmark series."
Elsewhere, China's yuan strengthened up to 6.3585 per dollar, rebounding from a 10-day low seen on Thursday. It was set to inch lower over the week as pressures from an aggressive Fed and geopolitical risks persist. - Reuters
Already a subscriber? Log in
Get 20% OFF The Star Digital Access
Cancel anytime. Ad-free. Unlimited access with perks.
