The Malaysian ringgit and the Indonesian rupiah rose to multi-week highs on Wednesday as oil prices fell on hopes that the Strait of Hormuz would reopen, while Asian technology stocks climbed ahead of AI bellwether Nvidia's results.
The ringgit strengthened as much as 0.5% to 4.02 per dollar, its strongest since early June. With its near 0.8% gain so far this year, the ringgit is among the more resilient Asian currencies helped by solid growth and economic fundamentals, weathering the impact of the Middle East conflict better than other Southeast Asian peers.
In Southeast Asia, some oil-sensitive currencies, including the rupiah, the Philippine peso, and the Indian rupee, have tumbled between 4.5% and 5.9% this year, as energy costs have raised concerns over inflationary pressures and growth prospects.
"The ringgit's resilience has been supported by Malaysia’s relatively strong growth, healthy trade and current-account position, and continued investment inflows, while a softer U.S. dollar has provided an additional tailwind," said Ernest Chew, head of ASEAN equities at BNP Paribas Asset Management.
"Near-term direction will likely depend mainly on U.S. rate expectations, upcoming Fed signals including Jackson Hole, and whether domestic corporate earnings continue to confirm Malaysia’s relatively resilient growth outlook."
The rupiah strengthened slightly to 17,670 a dollar, its strongest since mid-June. The currency has recovered some losses since early August, with Destry Damayanti's nomination as the sole candidate for Bank Indonesia governor helping ease governance concerns surrounding Indonesian institutions.
The peso also rose marginally. The Philippine central bank will likely raise its key rate for a third straight week on Thursday, with inflation and peso weakness being prioritised over slowing economic growth.
Iran said it had restarted talks with Oman to manage the Strait, with both countries saying they discussed "a joint temporary navigational corridor" through the strait and agreed to clear it of mines. Oil prices fell over 2% as a result.
The Thai baht held at 32.71 per dollar ahead of the Bank of Thailand rate decision later in the day. The central bank is widely expected to leave its key rate unchanged and remain on hold through 2027, as demand remains fragile and inflation remains within its target range.
South Korean stocks extended gains, climbing as much as 2.1% as the chipmaker-led benchmark rose ahead of Nvidia's results later in the session.
Taiwan stocks climbed as much as 1.5% to their highest in more than a week.
HIGHLIGHTS:
** BOJ to speed up its tightening campaign, raise key rate to 1.25% in September
** Canada slaps retaliatory tariffs on US goods worth $20 billion as trade war intensifies
** China's Huawei, US PC maker HP sign multi-year Wi-Fi patent deal - Reuters
