MOST Asian emerging currencies were on the backfoot against a firm dollar on Wednesday, as resilient U.S. data eased growth concerns, while the Thai baht hit a seven-month low as political uncertainty sparked an investor sell-off.
Equities in the region were largely mixed, with shares in South Korea, down 0.7%, leading declines, while Singapore and Malaysia gained 0.1% and 0.3%, respectively.
The baht depreciated as much as 0.8% to hit its lowest level since Nov. 30, as doubts linger over whether the leading prime ministerial candidate could secure enough votes to assume the top position in the new parliament's first session next week.
"There seems to be some conflicts between the Pheu Thai party and the Move Forward party in terms of the House speakership which could lead to more uncertainty about forming the coalition government" said Poon Panichpibool, markets strategist at Krung Thai Bank.
This could lead to volatility or more weakness for baht in July, Panichpibool added.
The currency has lost 2.2% so far this year, making it one of the worst-performing currencies in Southeast Asia. The country's central bank said on Tuesday it would further relax foreign exchange regulations in the second half this year to encourage capital outflows as baht continues to be volatile.
Elsewhere, the South Korean won fell 0.5%, while the Philippine peso and Singapore dollar slipped 0.2% each.
In the United States, data showed consumer confidence increased in June to the highest level in nearly 1-1/2 years, indicating the economy remained on solid footing despite fears of a recession.
"Despite all the headwinds and a banking sector scare, there still is momentum in the U.S. economy," analysts at DBS said in a note, adding, it does not look like the U.S. is slipping into recession any time soon.
"It probably makes sense to trade as if there is no imminent recession, noting that the Fed is also poised to tighten at a slower pace ahead (which also reduces the risks of an accident)."
The Chinese yuan inched down 0.1% despite the central bank of the country growing increasingly uncomfortable with the recent slide in the currency.
However, Alvin Tan, head of Asia FX strategy at RBC Capital Markets, said the intervention by the People's Bank of China was rather "very obvious" and the deviation from the expected level was not very.
Markets in Indonesia, and the Philippines were closed for a public holiday.
HIGHLIGHTS:
** Profits at China's industrial firms tumbled 18.8% year-on-year in the first five months of 2023
** Malaysia central bank to intervene in FX markets as ringgit losses 'excessive'
** India's 10-year benchmark yields fell 1.1 basis points to 7.052% - Reuters
