THE Singapore dollar fell on Friday, while most Asian currencies and shares rose after the city-state's central bank unexpectedly left its monetary policy settings unchanged, raising hopes that the likely next U.S. rate hikes would be the last this cycle.
The Singapore dollar weakened 0.2%, hitting its lowest since Feb. 9. However, currencies across the region trended higher, with the Malaysian ringgit posting its fifth consecutive weekly gain, as the U.S. dollar tumbled to a one-year low.
The Monetary Authority of Singapore (MAS) for the first time since April 2021 left its monetary policy unchanged, joining central banks in India, Canada, South Korea and Australia in standing pat as fresh concerns about global growth overshadowed worries about persistently high inflation.
"We anticipate a neutral-to-dovish stance from the MAS - if downside risks escalate, the MAS may loosen by reducing the pace of SGD appreciation through the slope," said Jeff Ng, a senior currency analyst at MUFG Bank.
The central bank at the helm of one of the world's most open economies pointed to multiple problems, including higher global borrowing costs and fragilities in the global financial system.
Benchmark 10-year yields rose 2.5 basis points (bps) to 2.772%, as Singapore's economy grew slower than expected in the first quarter.
Core inflation pressures for the city are likely to moderate in second half of fiscal 2023, Goldman Sachs said in a note.
The Indonesian rupiah led the gains among Southeast Asian currencies, climbing 0.6% and posting its best weekly jump since Jan. 13.
A Reuters poll found that Bank Indonesia is expected to keep its key interest rate unchanged at 5.75% on April 18 for a third consecutive meeting and for the rest of this year.
Barclays analysts said steep move in interest rates in emerging markets, which were in tandem with U.S. hikes, acted as an important stabiliser for local assets in the recent global banking shock.
Southeast Asia's largest economy will also be posting its trade data on April 17, where according to a Reuters Poll, trade surplus for March was seen shrinking from the previous months, with exports softening amid moderating commodity prices.
Taiwan shares led gains in the region, up 0.8%, followed by shares in Singapore and Jakarta rising 0.3% and 0.6%, respectively. Currency and stocks in China inched higher.
The country is due to post its economic data on April 18, with a Reuters poll showing that the gross domestic product likely perked up in the first quarter of the year.
Highlights
** CVC mulling stake sale in Malaysia's QSR Brands after IPO delays
** Indonesian 10-year benchmark yields fall 2.1 bps to 6.622%
** New year revelry returns to Thai streets as tourism rebounds - Reuters
