Asian currencies and stocks advanced on Monday, led by Malaysia's ringgit and Taiwan's benchmark stock index, after Federal Reserve Chair Jerome Powell's dovish Jackson Hole speech boosted investor appetite for riskier regional assets.
The ringgit jumped 0.7% to 4.19 per dollar, its biggest intraday gain in three weeks, while the Indonesian rupiah climbed 0.6% to a one-week high.
The Taiwan dollar added 0.6% and the Indian rupee strengthened 0.2%. Among regional equities, Taipei's benchmark surged 2.2% to a one-week high.
Jakarta, Seoul and Bangkok each gained over 1%. A gauge of emerging Asian equities advanced 2% to its highest since September 9, 2021.
Powell's comments on rising risks to the job market at the Jackson Hole symposium had markets pricing in 80% odds of a quarter-point reduction at the Fed's September 16-17 meeting and nearly half a percentage point of easing by year-end.
The Taiwan and South Korea benchmark indexes were further boosted by local semiconductor stocks after reports that U.S. chip giant Nvidia had halted production of its China-focused H20 AI processors, potentially benefiting regional competitors.
The dollar index, which measures the greenback against six major peers, was little changed but remained near Friday's low of 101.7425, a level not seen since July 28. Ray Sharma-Ong, Aberdeen Investments'
Southeast Asia multi-asset chief, said the firm favours high-yielding regional currencies like the rupee, particularly from regional central banks that remain on hold, as Fed cuts weaken the dollar while maintaining attractive yield spreads.
Looking ahead, the Bank of Korea and Bangko Sentral ng Pilipinas announce rate decisions on Thursday, with the latter expected to cut rates by 25 basis points, while BOK is seen holding steady, according to DBS.
Bank Indonesia surprised markets last week with a 25 basis point rate cut and signaled more easing ahead.
"In Asia-ex Japan, we see better risk-reward in laggard ASEAN-4 markets tactically where Fed rate cuts should provide greater support for ASEAN-4 central banks to embark on their growth supportive rate cuts," analysts at Nomura said in a note.
ASEAN-4 refers to the four largest economies in the Association of Southeast Asian Nations: Indonesia, Malaysia, the Philippines, and Thailand.
In Singapore, the key consumer price gauge rose 0.5% in July, lower than economists' forecasts. The Singapore dollar and benchmark index were largely flat.
Meanwhile, Chinese blue chips extended their liquidity-fueled rally with the surging 1.4% to their highest since mid-2022, bringing the index's August gains to almost 10% despite subdued domestic demand and weak corporate pricing power.
HIGHLIGHTS:
** South Korea tells China it wants to upgrade economic relations
** Equity markets in Philippines closed for a public holiday
** Thailand car production drops 11.4% y/y in July - Reuters
