Asia FX mixed; ringgit extends decline on weak growth outlook

New Straits Times

19-05-2025

KUALA LUMPUR: The Malaysian ringgit extended losses on Monday after the central bank lowered its annual growth forecast, while other emerging currencies were mixed against a dollar softened by Moody's downgrade of the United States' credit rating.
Malaysia's currency fell as much as 0.5 per cent to 4.313 per US dollar while equities dropped 1 per cent. The Southeast Asian country's economy expanded by 4.4 per cent in the first quarter, data showed Friday, slowing from the previous quarter.
The central bank flagged a dimmer outlook as persistent trade tensions weighed on consumer spending and investment. Analysts at Citi described the data as dovish and said it may bring the central bank closer to a 25-basis-point rate cut in the second half of the year.
Elsewhere in the region, the Thai baht led gains among Asian currencies, while the Taiwan dollar and Singapore dollar also edged higher. The Indonesian rupiah fell 0.4 per cent while the Philippine peso was more or less unchanged.
The US dollar softened in early Asia trade, after a sharp 0.6 per cent advance last week, with Moody's surprise downgrade intensifying concerns around the country's bloating debt pile.
"While there was some relief from the temporary pause in US-China tariffs, Moody's downgrade of US credit rating has added a layer of uncertainty," said Mohit Mirpuri, an equity fund manager with SGMC Capital.
Data from Thailand showed gross domestic product grew more than expected during the first quarter but the state planning agency lowered its annual forecasts on lingering worries over the country's export-focussed economy.
The Bank of Thailand had downplayed the chances of more rate cuts last week despite a worsening economic outlook from trade concerns, challenges stemming from an aging population, low productivity, and high household debt.
Equity markets were downbeat in emerging Asia while Chinese shares pared some losses after China's industrial output grew faster than anticipated in April. Underwhelming economic data out of China underscored the mounting challenges for the economy posed by its ongoing trade spat with the US
US equity futures dipped as global markets continued to assess the fallout from Moody's credit action. Stocks in Thailand and Singapore fell 0.2 per cent and 0.2 per cent respectively. Shares in Taiwan and South Korea fell 1.2 per cent each