Asian currencies and stock markets advanced, as investor focus shifted from worries about the global banking system to key US inflation data due later in the day, expected to give a fresh reading on the Fed’s monetary policy plans.
Most currencies in the region were also set to end the quarter on a positive note, with Indonesia’s rupiah on track to record a 3.8 percent rise.
The rupiah strengthened 0.5 percent on Friday to hit a near two-month high.
“In the near term, the rupiah could get more of a lift if there is further dollar weakness.
There could also be more foreign buying into Indo bonds if the Fed keeps softening its stance,” Maybank analysts said in a note.
Analysts at ANZ said high coal prices have helped maintain positive export growth in Indonesia, adding that the rupiah remains their preferred high-yield currency in the region.
Malaysia’s ringgit and the South Korean won rose 0.3 percent each.
The Indian rupee appreciated 0.2 percent and was set to snap five quarterly losses.
Weakness in the dollar, which is tracking towards a second consecutive quarterly loss, boosted investors’ appetite for riskier Asian assets.
Markets are awaiting the February reading for the personal consumption expenditures price index (PCE) from the US, the metric by which the Fed measures its 2 percent inflation target, due later in the day.
“Big focus on core PCE where consensus expects it to decelerate on sequential terms. A faster deceleration should reinforce the disinflation story and support the tamer Fed profile narrative. This can further boost risk sentiments,” OCBC analysts wrote in a note.
Meanwhile, Philippine’s central bank said annual inflation in March was expected to come in between 7.4 percent and 8.2 percent, ahead of the release of the data on April 5.
The Bangko Sentral ng Pilipinas last week raised its benchmark interest rate by 25 basis points and said its next policy move would depend largely on how consumer prices will behave in the coming months. — Reuters
