Asian currencies were trading in a tight range on Tuesday, as concerns over a potential U.S. government shutdown threatened to delay key economic data, while the Thai baht slid for a sixth day, with officials remaining alert to curb its appreciation.
Most equity markets were trading in varied directions, with stocks in Manila falling for a seventh consecutive day and hitting their lowest point since early April. South Korean shares retreated after gaining more than 1% in the previous session.
By contrast, China’s Shanghai Composite and Malaysian stocks rose 0.4% and 0.5%, respectively, providing a lift to the MSCI’s EM Asia equities index (.MIMS00000PUS).
Philippine stocks have shed more than 4% in September, a month marked by protests linked to a corruption probe and persistent pressure on the peso . The currency slipped a further 0.5% on Tuesday, bringing its monthly loss to nearly 1.7%.
A possible U.S. government shutdown remains an overhang on the market as traders weigh the likelihood of a delay in the release of key jobs data that will leave the Federal Reserve flying blind when it sets policy on October 29.
Market participants have scaled back their bets on Fed rate cuts, more so after Chair Jerome Powell signalled a cautious approach to easing earlier in the month.
Traders are currently pricing in 42 basis points of Fed easing by December and a total of 104 basis points by the end of 2026, about 25 bps less than levels seen in mid-September.
Trading is pretty subdued, but the dollar is retreating as markets price in upcoming U.S. rate cuts, supporting generally firmer Asian FX, said Kyle Rodda, senior financial market analyst at .
The key question is whether the Trump administration follows through on permanent federal layoffs. Any such move could slightly dampen U.S. growth, which would be negative for Asian, particularly emerging markets and currencies, Rodda said.
Elsewhere, Taipei shares TWSE:TAIEX broke a three-day losing streak, lifted by Wall Street’s overnight rally as investors piled into heavyweight tech stocks on optimism over artificial intelligence and prospects of further U.S. rate cuts.
Among currencies, the baht slipped to 32.315 per U.S. dollar, its lowest level since September 4. The Singapore dollar weakened 0.2% while the Indonesian rupiah and Malaysian ringgit edged lower.
The MSCI index of emerging market currencies (.MIEM00000CUS) remained flat for the day, after having snapped seven consecutive sessions of losses on Monday.
The Thai baht has surged 6.3% so far this year, making it Asia’s second-best performing currency after Taiwan Area ,China’s dollar. It also touched a four-year high earlier this month, prompting the government to step in to curb its strength, which has been weighing on exports and tourism.
The baht’s weakness, despite rising gold prices, likely reflects a breakdown in the traditional gold–THB correlation as a rising bullion do not translate into a boost for the currency as it did in the past, said Poon Panichpibool, a markets strategist with Krung Thai Bank.
Among other currencies, the South Korean won weakened 0.3% while the Indian rupee was flat. The Chinese yuan dipped 0.1%, while the Japanese yen inched higher.
Source: Reuters
