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BENGALURU, Dec 4 — Most Asian currencies weakened today with the dollar getting a lift from the US Senate’s approval of a tax overhaul plan at the weekend.
The Senate deal moves Republicans and President Donald Trump a big step closer to their goal of slashing taxes in what would be the largest change to US taxation since the 1980s.
“I expect finally the tax reform will be passed and signed into law so in January we will see some modest gains in the dollar versus emerging Asian currencies,” said Gao Qi, Asia FX strategist at Scotiabank.
The dollar index, which measures the greenback against a basket of six major currencies, rose about 0.31 per cent to 93.174 at 0644 GMT. The Singapore dollar and the Thai baht weakened 0.19 per cent and 0.12 per cent, respectively.
The Taiwan dollar traded flat ahead of tomorrow’s consumer price inflation numbers, expected to be 0.26 per cent. Malaysia’s ringgit firmed 0.36 per cent today, the most in the region, as November factory data showed the strongest expansion in the manufacturing sector since April 2014, thanks to solid growth in output and new orders on improved domestic and overseas demand.
The yuan firmed 0.08 per cent even though the People’s Bank of China (PBOC) set a weaker fixing rate for the second consecutive day. The currency eased against the greenback on Friday and ended the week lower.
The Indian rupee firmed 0.12 per cent. The Reserve Bank of India is due to hold monetary policy committee meeting on Wednesday.
Data issued on Friday showed India’s foreign exchange reserves crossed the US$400 billion (RM1.6 trillion) mark on November 24, the highest since September 22.
The peso continued its decline from Friday and weakened more than 0.5 per cent, the most among its Asian peers, as the Philippines equity index slipped to its lowest since mid-September.
Philippine shares fell more than 1 per cent to a near 12-week low as the passage of a tax bill in the US Senate aided foreign outflows.
Indonesia’s rupiah traded flat as data for November showed inflation reached its lowest since December 2016 at 3.30 per cent year on year, lower than expectations of 3.40 per cent from a Reuters poll of analysts.
Core inflation for the same period also came in lower than expected, at 3.05 per cent, against the expected 3.10 per cent, lowering the potential for a rate hike.
“The key risk going forward is oil price, depending on how the government will manage administered price changes next year,” DBS Group Research economist Gundy Cahyadi wrote in a note issued shortly before the data was released.
“Otherwise, core inflation staying soft at 3.1 per cent suggests that demand-pull inflationary pressures remain contained for now.”
S. Korean won
The Korean won was the region’s second-biggest loser , weakening 0.21 per cent against the greenback.
“The Korean won appreciated a lot in the past sessions and it also typically moves at a faster pace compared to regional currencies. It appreciates more, it depreciates more,” added Scotiabank’s Qi.
The Bank of Korea hiked the benchmark rate on November 30, as was widely expected, for the first time in six years. — Reuters