BANGKOK (Reuters): The Malaysian ringgit and Indonesian rupiah rose on Monday but a bad day for Thai baht as Asian markets breathed a sigh of relief following a modest rise in US inflation last month that allayed some fears around US interest rate moves next year.
The ringgit, the region's top performer so far this year, broke a 10-day losing streak to gain 0.5%. The rupiah , which has lost nearly 5% so far this year, rose 0.4%.
Equities in the region also rallied, with stock indexes in Seoul and Jakarta each adding more than 1%.
Shares in Taipei had their best session in two months, last up 2.5%.
The Federal Reserve's projection of a measured pace of rate cuts last week sent Treasury yields and the dollar surging, with many central banks, including those of India and Indonesia, intervening in the market to support falling currencies.
Higher U.S. rates could trigger problems for emerging markets such as capital outflows, currency weakness, inflation, and market volatility. But those concerns eased slightly after U.S. inflation data released on Friday showed only a modest rise in November.
The dollar index, which measures the U.S. currency against six of its largest peers, held steady at 107.72, after the data was released.
"As we have been noting, not all central banks in the region hold the Federal Reserve's policy path and the currency in the same regard when it comes to determining their own monetary policy decisions," analysts at Barclays said in a note on Saturday.
Last week, Bank Indonesia, known for its strong currency focus, held interest rates as expected while the Bangko Sentral ng Pilipinas opted to ease monetary policy despite the Fed's hawkish stance.
In Malaysia, domestic fundamentals are expected to remain strong despite global economic uncertainties in 2025, according to Christopher Wong, a currency strategist with OCBC.
"The country's economy faces external uncertainties from three factors: a potential slowdown in the Fed's rate cut cycle, potential U.S. tariffs, and a possible stall in China's economic recovery, all of which could negatively impact the ringgit," Wong said.
In Thailand, the baht fell as much as 0.5% while the stock market was up by 0.3%.
Top Thai officials last week called for swift and drastic interest rate cuts to rescue the economy from "disaster", and also cited concerns over high household debt levels. - Reuters
