Thai baht leads Asian FX gains as Powell testimony reignites risk

  • Thai baht at 1-week high
  • Malaysia interest rate decision is due later today
  • Stock markets up again

March 3 (Reuters) – The Thai baht rose to a weekly high on Thursday and other Asian currencies rose after the US Federal Reserve governor said the Russia-Ukraine crisis was unlikely to derail policy plans, leading to it would help revive appetites for more risky assets.

Federal Reserve Chair Jerome Powell also backed a 25 basis point hike in March, effectively ruling out the prospect of the feared 50 basis point hike. Continue reading

The baht, down 1.4% since Russia’s invasion of Ukraine last month, pushed energy prices higher and boosted safe-haven demand, rising 0.9%.

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Mitul Kotecha, a senior EM strategist at TD Securities, also cited the improving tourism outlook as a potential bright spot for the baht.

“Tourism is a major source of income for Thailand, and if there is talk of China opening the door to overseas tourism, it will become a reality in the coming months. That bodes well for the Thai baht,” he said.

The Malaysian ringgit also gained 0.1% ahead of a policy decision. A Reuters poll expects the central bank to leave the federal funds rate on hold at 1.75%. Continue reading

Powell said in testimony late Wednesday the bank is largely pursuing its rate hike cycle as planned, unencumbered by risks from Russia’s invasion of Ukraine.

The testimony followed a sharp sell-off in risky assets in the last few days after the military crisis. As a result, markets took Powell’s comments as a vote of confidence in the economy, even as the prospect of higher interest rates supported the dollar.

“These could be the reassurances sought by market participants who have been trying to balance their expectations between geopolitical risks and the Fed’s policy outlook,” said Yeap Jun Ron, market strategist at IG.

China’s yuan appreciated against the dollar as investors turned their attention to the annual parliamentary meeting for more clues on the economic agenda. Continue reading

The Malaysian stock market (.KLSE) rose 0.7%, driven by energy, metals and palm oil producers, which rallied on higher commodity prices.

Supply shortages due to the Russian invasion of Ukraine have sent commodity prices higher, with crude oil futures hitting nine-year highs of $118.22 a barrel and aluminum and palm oil hitting all-time highs.

Other stock markets in Asia also continued their uptrend after Wednesday’s plunge, led by South Korean stocks (.KS11), which rose 1.4%, driven by the big tech stocks.

Indian equities (.NSEI) were also up 0.2%, reversing some of the last session’s losses.

Markets in Indonesia were closed for a public holiday.


** Singapore’s 10-year bond yields rose 76 basis points to 1.888%

** Russia’s ruble down 0.4%

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Reporting by Harshita Swaminathan; Editing by Sam Holmes

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