Asian emerging market currencies fell on Wednesday, led by the Indonesian rupiah and the Taiwanese dollar, as the dollar strengthened after U.S. jobs data showed the Federal Reserve did not need to rush to lower interest rates.
MSCI's index tracking EM currencies fell 0.2%, set for its worst day in nearly three weeks.
U.S. jobs data overnight suggested a healthy labour market, meaning the Fed had the room to ease rates less faster than expected. That sent the dollar index to near two-year peaks and 10-year Treasury yield to its highest since April, making emerging market investments less appealing in comparison.
"Higher-for-longer (U.S. interest rates) may weigh on sentiments as yield differentials favour U.S," Christopher Wong, a currency strategist with OCBC, said in an email.
"EMs that take on a more dovish stance may see their FX come under pressure. For instance, PHP, INR and to some extent, IDR."
The Taiwan dollar and Indonesian rupiah each declined 0.5% while the Philippine peso retreated 0.3% to a two-week low. The Malaysian ringgit fell 0.2%.
The Chinese yuan fell to a fresh 16-month low. It has been routinely knocked lower amid fears of higher U.S. tariffs once Donald Trump takes oath as the U.S. president.
Equities in the region were mixed. Stocks in Singapore rose as much as 1.1% to hit their highest since October 2007.
Barclays said Singapore's central bank could lower interest rates at this month's policy meeting since the country's core inflation has likely cooled faster and slightly more than expected.
Stocks in South Korea rose 1.2%, gaining for a fourth consecutive session. Samsung Electronics, which has lagged rivals in supplying high-bandwidth memory chips to Nvidia, gained after Nvidia's CEO was quoted as saying he believed the Korean company could quickly come up with a new design.
Stocks in Taiwan snapped a three-day winning streak to drop 1%, while Malaysia stocks lost 0.5%.
HIGHLIGHTS:
** Thai finance minister hopes for more than 3% growth in 2025
** Trump win triggered 2024 exit by overseas investors from Asian equities
** Former BOJ chief Kuroda predicts more rate hikes - Reuters
