A surge in Taiwan and Singapore currencies bolstered emerging Asian forex markets as investors viewed a phone call between US President Joe Biden and China’s premier Xi Jinping as a potential precursor to easing strained relations.
Equities in the broader region also rose, recouping some losses incurred this week, with Taiwan and Singapore adding 1 percent and 0.8 percent, respectively.
Biden spoke by phone with Xi for about 90 minutes, a senior US official said, with both leaders discussing the need to avoid letting competition between the world’s two largest economies veer into conflict.
“Markets weren’t expecting Biden and Xi to actually speak until the G-20 summit later in the year,” said Khoon Goh, head of Asia research at ANZ Banking Group (Singapore).
“Markets are taking this as a hopeful sign that maybe we could see toning down of recent tensions.”
Sino-US relations deteriorated to their lowest point in decades due to a long-drawn trade war and COVID-19-related tensions, especially during the preceding Donald Trump administration. The Biden-Xi conversation was only the second call between the leaders since Biden took office in January.
Analysts at Maybank, however, said that “spillovers to sentiments could be constrained without more discernible translation to policy changes.”
Stocks in China, rose 0.3 percent, notching their highest since mid-February, while equities in Philippines added 0.7 percent to close at its highest since July 7.
The rupiah, the Taiwanese dollar, the Malaysian ringgit and the Singaporean dollar added between 0.2 percent and 0.3 percent, while other regional currencies saw modest gains.
