Most Asian stocks and currencies surged on Monday, with the Indonesian rupiah and Malaysian ringgit leading gains, after Federal Reserve Chair Jerome Powell's dovish Jackson Hole signals last week boosted appetite for riskier regional assets.
The ringgit jumped 0.6% to 4.20 per dollar, its biggest intraday gain in three weeks, while the rupiah climbed 0.5% to a one-week high. The Taiwan dollar added 0.6% and the Indian rupee strengthened 0.2%.
Among regional equities, Taipei's benchmark led the rally, surging 2.5% to a one-week high. Jakarta and Seoul each gained over 1%, while Bangkok advanced 0.7%.
Powell's comments on rising risks to the job market at the Jackson Hole symposium had markets pricing in 80% odds of a quarter-point reduction at the Fed's Sept 16-17 meeting and nearly half a percentage point of easing by year-end.
The Taiwan and South Korea benchmark indices were further boosted by local semiconductor stocks after reports that US chip giant Nvidia had halted production of its China-focused H20 AI processors, potentially benefiting regional competitors.
The dollar index, which measures the greenback against six major peers, was little changed but remained near Friday's low of 101.7425, a level not seen since July 28.
Ray Sharma-Ong, Aberdeen Investments' Southeast Asia multi-asset chief, said the firm favours high-yielding regional currencies, such as the rupee, as Fed cuts weaken the dollar and Asian central banks stay put, maintaining attractive yield spreads.
Looking ahead, the Bank of Korea (BOK) and Bangko Sentral ng Pilipinas (BSP) announce rate decisions on Thursday, with BSP expected to cut rates by 25 basis points, while BOK is seen holding steady, according to DBS.
Bank Indonesia surprised markets last week with a 25-basis-point rate cut and signalled more easing ahead.
"In Asia-ex Japan, we see better risk-reward in laggard Asean-4 markets tactically where Fed rate cuts should provide greater support for Asean-4 Central Banks to embark on their growth supportive rate cuts," analysts at Nomura said in a note.
Asean-4 refers to the four largest economies in the Association of Southeast Asian Nations: Indonesia, Malaysia, the Philippines, and Thailand.
Among other currencies, the South Korean won, the Singapore dollar, and Thai baht lost 0.1%, respectively.
The MSCI gauge of emerging market currencies added 0.3%, while a gauge of emerging Asian equities advanced as much as 2% to its highest since Sept 9, 2021.
Source: theedgemalaysia