Most Asian currencies and equities inched higher on Monday, with the Indonesian rupiah leading the pack, after weak economic data out of the United States raised expectations of further rate cuts by the U.S. Federal Reserve.
The Indonesian rupiah climbed 0.4% against the U.S. dollar, reaching its highest since January 24. The Malaysian ringgit and the Taiwanese dollar also rose by 0.2% each.
The U.S. dollar is under pressure after January retail sales data showed the biggest drop in nearly two years, amid concerns about some of the economic policies of President Donald Trump such as his broad tariffs on imports.
The U.S. dollar index, which measures the currency against six major counterparts, was largely unchanged at 106.67 after dropping 1.2% last week.
Meanwhile, U.S. Vice President JD Vance warned of sanctions and potential military action against Russia if it fails to agree to a peace deal guaranteeing Ukraine's long-term independence, drawing renewed investor focus to the Russia-Ukraine conflict.
Asian stocks largely traded higher, with markets in Jakarta and Taipei rising by 1.6% and 1.3% respectively. Shares in Seoul and Singapore also gained more than 0.5% each.
In Indonesia, the rupiah is on track for its fourth consecutive day of gains after President Prabowo Subianto announced plans for a new sovereign wealth fund to help the country reach a target of 8% annual economic growth by 2029.
The fund will launch on February 24. Next week, Bank Indonesia (BI) is widely expected to cut rates to bolster growth amid low inflation.
"Dollar decline can also provide the IDR relief, backing a BI cut," analysts at Maybank said.
In Singapore, the government is set to unveil its budget this week, prioritising living costs and jobs, following recent data indicating that the economy expanded faster than projected at the end of 2024.
Last month, the Monetary Authority of Singapore loosened policy settings, saying it expected inflation and growth to be slower than initially forecast for this year.
"We are pencilling in another MAS easing move at the April or July 2025 meeting, via a slightly gentler S$NEER slope, amid global trade uncertainty and a tame inflation outlook," the Maybank analysts said.
The Philippine peso was under pressure following the Bangko Sentral ng Pilipinas' decision on Thursday to maintain its key policy rate. The peso slipped 0.3% amid concerns about the country's economic outlook.
Equities in Thailand extended losses to drop more than 2% as index heavyweight Delta Electronics (Thailand) tumbled 26% after posting weak annual earnings on Friday.
HIGHLIGHTS:
** Thai Q4 GDP grows 3.2% y/y, below forecast
** Indonesia books $3.45 billion trade surplus in January - Reuters
