news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

driven by the federal reserve's 50 basis point rate cut, asian currencies saw strong gains today, hitting a 14-month high. the indonesian rupiah, korean won, malaysian ringgit and others rose.

meanwhile, asian stock markets also responded quickly, with the msci asia regional stock index rising 1.6% and japan's topix index soaring 2%.

"this rate cut sends a clear signal to financial markets, businesses and households that the fed is supporting economic growth. asian markets should receive the fed's actions very positively," said gary dugan, ceo of the global cio office in singapore.

fed rate cut boosts asian currencies

on thursday, the bloomberg asia dollar index rose 0.2% to its highest level since july 2023. among asian currencies, the indonesian rupiah and the south korean won led gains, while the malaysian ringgit climbed to its highest level since 2022.

not only asian currencies, but other emerging market currencies such as the mexican peso and the south african rand also rose.

manish bhargava, chief executive of straits investment management in singapore, said the fed's move to increase the likelihood of a soft landing by cutting interest rates "could boost risk appetite and drive capital inflows into emerging markets as investors seek higher returns."

the rate cut not only boosted the performance of asian assets, but also provided asian central banks with more flexibility to cut interest rates. the philippine central bank took the lead in cutting interest rates as early as august, and the indonesian central bank also unexpectedly announced a rate cut this week. with the fed's policy shift, the market generally expects more easing policies in the next 12 to 18 months.

"narrower interest rate differentials and capital flows provide a more supportive environment for policymakers and investors in asia," said haomin li, macro strategist at lombard odier in singapore.

barclays strategist mitul kotecha said today that while a weaker dollar has provided some support for asian currencies, it is expected that this rally may be partially reversed by 2025.

asia's economy grows steadily, and currency outlook looks positive

analysts believe that in addition to the weak us dollar, the solid growth prospects of the asian economy also provide further support for local currencies. strong august manufacturing data from south korea, the philippines, thailand, taiwan, india and china indicate that confidence in the regional manufacturing sector has increased.

alvin tan, head of asian foreign exchange strategy at royal bank of canada, said that although asian currencies performed well overall, currency performance would also diverge due to different economic growth and policy prospects among countries.

in addition, the japanese stock market performed particularly well, with the nikkei 225 index closing up 2.15% today.

rina oshima, a strategist at japan's okasan securities, pointed out that the interest rate cut announced by the federal reserve was in line with market expectations, and the depreciation of the yen did not put pressure on the japanese economy. this situation is "ideal" for the japanese market.