Thailand's baht slumped to a near 11-month low on Monday pressured by a stronger dollar and concerns over a widening fiscal deficit, while equities in Southeast Asia's second-largest economy reversed course to trade marginally higher.
Elsewhere in emerging markets, the Indonesian rupiah depreciated 0.5%, hovering near its nine-month low of 15,525.00 per U.S. dollar, while shares advanced 0.5% as data showed annual inflation came in near the lower end of the central bank's target range in September.
Indonesia's 10-year benchmark bond yields touched an over six-month high, adding 4.2 basis points to 6.952%, as surging U.S. Treasury yields and worsening property sector situation in China sparked a sell-off in local bonds.
"Every development in the American economy and various statements from Fed officials, especially in terms of inflation and the labour market, will influence the movement of global investors in the Indonesian bond market," analysts at Maybank said in a note.
Meanwhile, the Russian rouble weakened as much as 1.7% to trade at 98.671 per dollar, lowest level since mid-August, while the Turkish lira slipped 0.2% to 27.472 per dollar.
The Thai baht depreciated up to 1.4% to 36.875 per dollar, its lowest level since early November 2022, impacted by concerns over a widening fiscal deficit due to higher spending by the new Thai government, and weak economic data.
In its latest efforts to bolster the sluggish economy, the Thai government plans to inject 560 billion baht ($15.22 billion) into the economy next year through its signature digital wallet policy.
"Uncertainty over the government fiscal stability due to incoming fiscal stimulus ... did hurt sentiments toward Thailand assets, especially bonds, which could be seen from continual selling flows from foreign investors lately," Poon Panichpibool, markets strategist at Krung Thai Bank said.
There could be further selling activities from foreign investors as long as the government does not clearly explain how it will fund the fiscal stimulus and eventually reduce the budget deficit, Panichpibool added.
The baht has lost more than 6.0% of its value so far this year and is among the worst-performing currencies in the region.
Meanwhile, Thailand's benchmark index rose 0.1% after declining 0.7% earlier in the day. Thai shares are the region's worst performers, with the index down 11.7% so far this year.
Elsewhere, the U.S. dollar index hovered near its recent 10-month high, which it hit due to persistently hawkish Federal Reserve rhetoric, adding pressure to riskier Asian assets.
Back in Asia, the Malaysian ringgit and Singapore dollar depreciated 0.2% and 0.3%, respectively, while the Philippine peso edged 0.1% lower. Equities in the region were largely firm, with benchmarks in Manila and Seoul rising 0.2% and 0.1%, respectively.
Equities in Singapore slid 0.6%.
Investors now await a slew of economic data throughout the week including inflation data from the Philippines and Thailand, and monetary policy decision from the Reserve Bank of India later this week.
Markets in China and India were closed on Monday for public holidays.
** Thailand central bank to hold rates at 2.50% through 2024 - economists
** China's factory activity recovery slows in September - Caixin PMI
** India to hold top spot for economic growth but risks to downside remain - Reuters poll
** China Evergrande chairman investigated over offshore asset transfers - WSJ - Reuters