Emerging Asian currencies strengthened on Thursday as the dollar weakened following a softer U.S. inflation report, while the U.S.-China trade truce and signs that President Donald Trump may adopt a milder stance in tariff talks also supported risk sentiment.
The Taiwan dollar advanced 0.8% to its highest level since early-May, and the South Korean won rose 0.9%. The Malaysian ringgit inched up 0.3%, and the Thai baht rose 0.4% to a near three-week high.
Investor focus this week remained on trade talks between Washington and Beijing, which concluded with a framework deal that would lift Chinese export curbs on rare earth minerals and restore access for Chinese students to U.S. universities.
"Relief from the fact that both the countries have managed to reach an agreement following their talks earlier in the week has been more or less priced in by markets, which has made the U.S. dollar continue to weaken, helping Asian currencies," said Khoon Goh, head of Asia research at ANZ.
The dollar index dipped 0.2% as signs emerged that Trump may take a more conciliatory tone in tariff negotiations.
Trump said he was open to extending a July 8 deadline to conclude trade talks with countries before imposing higher tariffs. He also said the U.S. would send out letters in one to two weeks outlining the terms of trade deals to dozens of other countries.
Meanwhile, data also showed U.S. consumer prices rose less than expected in May, prompting traders to ramp up bets on a Federal Reserve rate cut as early as September, adding pressure on the dollar.
Around the world, Iran warned if nuclear negotiations fail and conflict arises with the United States, it will strike American bases in the region.
Back in Asia, stocks in South Korea were up 0.9%, while those in Singapore and Malaysia edged up 0.2% and 0.1%, respectively. However, shares in Taiwan fell 0.8%.
Insurance company Fubon Financial Holding , which reported a significant loss for May, was among the top drags on the benchmark index.
"There are ongoing concerns about the impact of the strong Taiwan dollar on the profitability of Taiwanese life insurance companies," Goh said.
Thai stocks slipped 0.4% as political uncertainty deepened with the Supreme Court set to hear a case that could result in jail time for former Prime Minister Thaksin Shinawatra. Markets in Philippines were closed for a holiday.
HIGHLIGHTS:
** Pakistan boosts defence budget by 20% but slashes overall spending in 2025-26
** South Korea, Vietnam leaders agree to expand cooperation in areas such as nuclear power - Reuters
