BENGALURU: Singapore and the Philippines led modest gains among Asian stock markets on Thursday, as investors focused on U.S. stimulus plans, while Taiwan's dollar extended gains to the growing worry of the country's central bank.
The region's equity markets rose by no more than half a percent, barring Singapore and Manila, ahead of details around President-elect Joe Biden's pandemic relief package due later on Thursday.
Biden had promised "trillions" of dollars in aid and CNN reported that a package of $2 trillion was being considered.
That prospect and the U.S. Federal Reserve's pledge to keep buying bonds lifted Treasury yields once again, propping up the dollar and suppressing many of Asia's currencies, that were largely flat to lower.
Mizuho Bank said markets are "likely to be seduced by stimulus" ahead of Biden's fiscal plans, which could help spur a recovery in the world's largest economy and in turn trade-reliant Asia.
Taiwan's dollar stood out among currencies, gaining 1.7% to around 23-year highs. The central bank had called on banks dealing in foreign exchange to exercise restraint as it seeks to rein in the soaring local dollar, which has gained nearly 2% this year.
But the central bank finds itself in a tricky position of not wanting to appear to intervene too heavily in the currency market and being labelled a currency manipulator by the United States.
Taiwan was added to the Treasury department's watchlist last month. A soaring currency does not bode well for Taiwan's manufacturing economy, which relies heavily on electronics exports.
The Taiwan dollar gained nearly 6% on the greenback in 2020.
South Korea's won also dipped 0.3% ahead of Friday's central bank policy meeting where interest rates are expected to remain unchanged at 0.5%.
Robert Carnell, ING's Asia-Pacfic head of research, said there may be a case for easing considering weak jobs data this week, but argues that he doesn't feel the argument is compelling enough.
"The won may have a small rally on the day in the event that the BoK (Bank of Korea) does nothing as expected. Further moves in the won will be dominated by U.S. dollar trends."
A Reuters poll showed bullish bets on the won and Taiwan dollar nearly halved from last month as U.S. yields shot up prompting investors to reevaluate emerging market debt.
Philippine stocks climbed as much as 0.9%, while Singapore hovered around 10-month highs.
The Philippines authorised the emergency use the COVID-19 vaccine developed by Pfizer and BioNTech on Thursday, the first to be approved in the country. - Reuters
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