ASIAN currencies rose on Friday as risk appetite improved after U.S. President Joe Biden appeared close to reaching a deal to raise the government's debt ceiling, while the ringgit went flat after its monthly inflation reading.
The Malaysian ringgit, which was the top laggard in the early part of the day, was unmoved after government data showed the country's April consumer price index (CPI) rose 3.3% from a year earlier, in-line with forecasts.
"In terms of monetary policy, our forecast is for no further policy rate hikes, though we note the risk of another 25-basis-point increase to 3.25%, as Bank Negara Malaysia still views the policy stance as 'slightly accommodative'," said analysts at Barclays.
Sailesh Jha, group chief economist & head of market research at RHB Banking said, "the situation in Malaysia's currency market is a typical predicament in emerging markets, where the policy response is slow to respond to rising fiscal risks and domestic confidence in the currency falling rapidly."
The ringgit was hovering at its lowest level since November 2022, and was on track for its third straight week of losses.
Elsewhere in Asia, the Philippine peso led gains among peers, appreciating 0.6%, the South Korean won and Thai baht gained 0.1% each, while, Indonesian rupiah stood pat.
The region's major trading partner China saw its currency yuan appreciate 0.3%, while stocks in Shanghai jumped 0.5%.
"If Chinese consumers tighten their purse strings for international travel, it could weigh on services exports for economies dependent on Chinese tourism, mainly those in Asia-Pacific," said analysts at Barclays.
"The material increase we expected in Chinese tourist arrivals from second quarter may get pushed out to third as China's growth slows," the analysts added.
Additionally, data from Singapore showed its industrial production (IP) contracted 6.9% in April compared to a Reuters poll predicting a 4.4% fall.
The Singapore dollar was up 0.1%.
"IP fell in April, after expanding in March, as the volatile biomedicals cluster reversed its March surge. We continue to expect the Monetary Authority of Singapore to refrain from further FX-policy tightening in 2023," said Brain Tan, analyst at Barclays Bank.
Globally, the U.S. dollar moved higher after data showed to a resilient economy even after an aggressive rate hike cycle by the Federal Reserve.
Investors are also looking out for the Commerce Department's April personal consumption expenditure (PCE) index reading, the Fed's preferred inflation gauge, due later in the day.
Stocks in Asia took mixed positions, with shares in Philippines and Thailand falling 1% and 0.4% respectively, while equities in Taiwan and India gained.
HIGHLIGHTS:
** Thai cannabis sector spooked as election winner mulls reversing legalisation
** Indonesia, Malaysia to visit Brussels over concern about EU deforestation law
** U.S., Chinese commerce chiefs raise complaints on trade, investment, export policies - Reuters
