Emerging Asian currencies gained ground on Friday and extended their rally to a fourth-straight session, while being on track for a sixth-consecutive weekly gain, as investors moved towards riskier plays on rising concerns over US fiscal health.
The Indonesian rupiah added 0.3 percent while the Malaysian ringgit and Philippine peso rose between 0.5 percent and 0.7 percent.
The Philippine peso jumped sharply after having eked out small gains in the previous sessions on mounting political uncertainty in the country where the President asked his cabinet members to resign following poor Senate elections performance last week.
Sentiment around the peso improved on Friday after the domestic central bank governor said inflation should remain low in the coming months with growth expected to moderate this year and next.
The Bangko Sentral ng Pilipinas resumed its easing cycle in April by cutting the key interest rate by 25 basis points.
“Political uncertainty on domestic front has picked up, which could weigh on sentiment and growth. Geopolitical risks due to border clashes with China could impact tourism and export flows,” said Bank of America analysts in a note.
The benchmark index in Manila traded 1.1 percent in the green.
Elsewhere, the MSCI Emerging Market Currency Index added more than 0.2 percent this week, building on five prior weeks of gains and matching a streak last seen from July to September 2024.
Investor caution lingered as markets continued to digest the implications of President Donald Trump’s tax cut bill, which is projected to swell the US debt burden by $3.8 trillion over the next decade.
The rupiah was set to add near 1 percent in a week where Bank Indonesia (BI) lowered interest rates to boost economic growth in the country and vowed to stabilise the currency by further intervening in the local market.
“Over medium-term, Indonesia could benefit from higher conversion of USD deposits from corporates and retails,” said analysts at Bank of America.
