Regional central bank policies and domestic economic conditions drive varying performances amid sustained USD pressure and Fed hike expectations.
Most Asian currencies have weakened against the US dollar since mid-June, pressured by firm USD strength and rising US Treasury yields. Markets now fully price another Federal Reserve rate hike by October, adding to external headwinds for the region.
Indonesia’s rupiah volatility has eased after Bank Indonesia raised policy rates and boosted SRBI yields, though it remains sensitive to US yield movements. Meanwhile, Malaysia’s ringgit has stabilized due to repatriation efforts by government-linked firms, but political risks ahead of the July 11 state election may introduce near-term pressure.
Thailand’s inflation moderated to 2.4% year-on-year, while Indonesia’s inflation rose to 3.3%, nearing the upper limit of its target range. Exports in Indonesia fell 5.8% year-on-year, and the trade balance posted its largest deficit since April 2019.