Southeast Asian currencies dipped on Friday as investors sought the perceived security of the dollar after US President Donald Trump tested positive for COVID-19, a month away from an election that could have long-lasting implications for US relations with China and the region.
Early losses in Singapore and Indonesian stock markets deepened after the news of Trump’s positive test, as stock markets globally took a hit from the additional uncertainty it generated around November’s vote.
With major markets in China, South Korea, Taiwan and Hong Kong all on holiday, the rupiah, ringgit and Singapore’s dollar were all down around 0.2 percent versus the greenback.
“Markets have sold off in a knee-jerk reaction to the news, which is understandable,” said Khoon Goh, head Of Asia Research at ANZ.
“I imagine so long as it appears both the president and the first lady are in reasonable condition, these market moves will unwind.”
Stocks shed as much as 1.3 percent in Singapore and 1.8 percent in Jakarta, while those in Malaysia and the Philippines rose.
FGV Holdings and other Malaysian palm oil producers rose after falling sharply in the previous session, when the United States blocked the entry of FGV’s palm oil products into the country over allegations of forced labour.
Malaysia said it expected the United States to ban the imports of another plantation firm.
Sime Darby Plantation also flagged concern about a possible ban. Its shares, however, were up after falling more than 5 percent on Thursday.
Markets across the region, barring Thailand and Malaysia, were slated to post weekly gains and the Philippines was set to snap two straight weeks of losses.
The Philippine central bank kept rates unchanged on Thursday as expected as it waits for prior monetary stimulus to filter through the economy, but approved $11 billion in funds for the government.
Many analysts still expect a cut in the fourth quarter, with Goldman Sachs saying further COVID-19 curbs in the capital Manila are hurting the third-quarter growth outlook. — Reuters