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Asian currencies edge up, dollar slips; bank jitters linger

May 5, 2023 at 3:29 pm | Economic Affairs

May, 05(Agencies)—Asian currencies ticked up against a weaker dollar on Friday as investor jitters persisted amid fresh turmoil in the U.S. banking sector.
U.S. regional banks shares sank overnight on fears of a financial sector crisis. US dollar was last down 0.138% at 101.120.
Malaysia’s ringgit rose 0.3% on returning from holiday, buoyed by Bank Negara Malaysia’s unexpected rate hike on Wednesday and in reaction to the Fed’s policy statement signalling that it may pause further interest rate hikes. Most other currencies were slightly up.
Stocks in Jakarta .JKSE declined 1.5% even as Indonesia’s economy grew faster-than-expected in the first quarter. The country’s gross domestic product (GDP) rose 5.03% from a year earlier versus a 4.95% expansion that was predicted in a Reuters poll.
The rupiah IDR= was flat. Yield on the 10-year benchmark bond ID10YT=RR slipped further to 6.404% – its lowest level since January 2022.
Indonesia’s post-pandemic recovery has been helped by a commodities-led export boom, though analysts expect a slowdown in growth as commodity prices ease and policy tightening globally and domestically hits demand.
“We think the economy is set to struggle over the coming quarters. (But) on the plus side, the sharp fall in inflation.. will boost the purchasing power of households,” said Gareth Leather, senior Asia economist at Capital Economics.
Bank Indonesia has paused tightening in the past three months and some economists expect it to keep interest rates unchanged for the rest of the year.
Central banks in Asia have taken different monetary policy paths in recent months, as they deal with diverse inflation and economic growth factors.
In the Philippines, Bangko Sentral ng Pilipinas (BSP) has raised its benchmark interest rate to 6.25% in its fight against inflation.
But with inflation slowing, the central bank now has some leeway to pause its 10-month tightening cycle.
Annual inflation eased for a third successive month in April, and is on track to settle within the government’s 2% to 4% target in the fourth quarter, according to data released on Friday.

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