Malaysia's ringgit climbed on Monday against the dollar to hit its highest in more than three years as additional Chinese stimulus measures over the weekend propped up sentiment for regional currencies and extended a sharp rally in China stocks.
The ringgit rose as much as 0.6%, the most among emerging Asian currencies, and was trading at 4.099 per U.S. dollar. China is the biggest trading partner for most of the region.
The Malaysian currency has had a stellar quarterly run, advancing around 12.6%, making it the best performing currency of the year among emerging Asian currencies, driven by a host of factors such as robust foreign investor inflows, economic growth and political stability.
"We remain constructive on MYR's outlook as solid fundamentals continue to hold up - robust economic growth, current account surplus, fiscal improvement, and sustained foreign inflows," said Christopher Wong, a currency strategist at OCBC.
Beijing stocks soared nearly 6%, with investors hopeful that the slew of measures would halt the extended economic downturn faced by world's second-biggest economy. China's markets are closed from Tuesday for a week-long holiday.
China's central bank said it would tell banks to lower mortgage rates for existing home loans before Oct. 31, as part of sweeping policies to support the country's beleaguered property market. The new stimulus measures offset disappointment from China's slowing manufacturing activity in September.
The Thai baht, Taiwan dollar, and the South Korean won rose between 0.2% and 0.4%, while the Singapore dollar and the Philippine peso traded flat. Investors will look forward to inflation prints from South Korea, Indonesia and the Philippines during the week, while a crucial U.S. jobs report will likely determine if the Federal Reserve will deliver another outsized rate cut.
Indonesia and Philippines had already kicked off their rate-cutting cycle, although others such as Malaysia, Singapore and Thailand are unlikely to ease policy through 2025, according to Barclays analysts.
"A relatively more positive growth outlook if China does enjoy a significant rebound could, at the margin, reduce the need for monetary policy easing for some central banks," Barclays analysts wrote.
"This would reinforce our view that EM Asia central banks are unlikely to 'follow' the Fed in cutting big or quick," they added.
Among other Asian shares, Taipei stocks fell as much as 1.7%, with semiconductor giant TSMC losing 2.5%.
In Tokyo, the Nikkei slumped about 4.5%, as investors awaited policy directions from incoming Prime Minister Shigeru Ishiba, who has been critical of the central bank's policies in the past.
Shares in Seoul, Manila and Jakarta fell between 1% and 1.2%.
HIGHLIGHTS:
** Thailand has no limit on number of virtual bank licenses, official says
** Biden approves $567 mln in defense support for Taiwan, White House says
** China property shares jump as major cities ease buying curbs - Reuters
