Most Asian currencies strengthened against a broadly weaker US dollar, with the Thai baht outperforming its peers at the end of a week in which trade was largely subdued by the Lunar New Year holiday.
The Philippine peso was an outlier, weakening 0.1 percent after data showed inflation eased in January from the previous month, prompting the country’s central bank to say it will remain patient on policy levers.
“PHP likely reacting to dovish statements from Bangko Sentral ng Pilipinas (BSP) Governor, Benjamin Diokno, after the inflation report,” Nicholas Mapa, senior economist at ING said.
However, its benchmark index rose 1 percent, outperforming most of its peers.
Otherwise, the baht led the way, firming 0.6 percent against a US dollar whose index against other major currencies has dropped 2 percent this week – its biggest weekly fall since March 2020.
“The major factor for strength in THB lately is the falling USD which continues to move lower due to the somewhat surprising hawkish tone from the ECB last night,” Poon Panichpibool, markets strategist at Krung Thai Bank said.
“The market seems to have reversed back to risk-on mode,” Panichpibool added.
The country’s headline consumer price index jumped to a nine-month high but its commerce ministry said inflation was not alarming and would not require government action yet.
Sentiment was also lifted by the Thai government’s move earlier this week to invite back fully-vaccinated tourists, in its latest attempt to revive the pandemic-ravaged tourism sector, a key driver of the country’s economy.
