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JAKARTA, April 4 (Reuters): Most Asian currencies and equities struggled for direction on Tuesday as investors fretted over new worries about inflation, after a production cut by the Organisation of Petroleum Exporting Countries, and a looming global recession.
The Malaysian ringgit and the Indonesian rupiah were the top gainers for the day, rising 0.3% and 0.4%, on account of elevated crude oil prices.
"The higher oil price puts the ringgit back in the frame as a regional currency to favour. This is probably helping the currency modestly for now," said Paul Mackel, global head of FX research at HSBC.
Brent crude price continued its upward trajectory, stoked by the decision of the OPEC+ on Sunday, to cut output targets by a further 1.16 million barrels per day, stirring investor concerns about the inflationary environment.
"The surprise announcement of OPEC output cuts from May could pressure oil prices in the near term, which could imply more sticky inflation," OCBC analysts said in a research note.
Other currencies like the Singapore dollar, Thai baht, Chinese yuan and the Philippine peso traded between flat and down 0.3%.
Globally, the safe-haven dollar recovered some losses, although it was still in a defensive mode, since weak manufacturing data from the US pointed to the possibility of the world's largest economy slipping into recession.
Following this, market players re-adjusted their expectations on the U.S. Federal Reserve's outlook on rates, believing the U.S. central bank more likely to start slashing rates by September.
The dollar index, which measures its strength against six major currencies, rose marginally by 0.1% to 102.2 at 0625 GMT "There is less fear of the Fed after the volatility in March and once again the end of its hiking cycle is coming into the frame," Mackel added.
Separately, the South Korean won staged a turnaround from the previous day's losses to rise as much as 0.6% after the Asian trade bellwether reported cooler-than-expected inflation, prompting investor bets that the rate-tightening cycle could be over for its central bank.
Among Asian shares, the Indonesian, Malaysian and the Philippines indexes traded lower between 0.4% and 0.7% down. Other equities in Singapore and South Korea rose 1% and 0.3% respectively. - Reuters
