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The Star
01-08-2025
- Business
- The Star
Asian currencies fall to two-month low as tariff deadline nears
MANILA (Bloomberg): Asian currencies slid to a two-month low, weighed by a resilient dollar and uncertainty over US tariff talks with some countries. The Bloomberg Asia Dollar Index fell as much as 0.2% in early trading to the lowest level since May 19. The Philippine peso led declines, as elevated oil prices fueled concerns over the nation's crude import bill. The Indian rupee hovered near record lows. Regional currencies were set to cap their biggest monthly loss this year as the greenback surged after the Federal Reserve held benchmark interest rates. Expectations for a September rate cut have also eased following robust US economic data. Meanwhile, sentiment remains cautious with some countries yet to finalize trade agreements with the US ahead of the Aug. 1 deadline. "Asian FX markets continue to be shaped by persistent US dollar strength,' said Shier Lee Lim, lead FX strategist at Convera in Singapore. "The upcoming tariff deadlines and ongoing negotiations involving Malaysia and Thailand remain key flashpoints for market sentiment, as investors look for signs of progress or further escalation.' Central banks across the region have stepped up intervention efforts to stabilize their currencies. The Hong Kong Monetary Authority stepped in to buy HK$3.925 billion to defend the currency peg, while Indonesia's central bank intervened in the foreign-exchange markets. The People's Bank of China set a stronger-than-expected fixing to support the yuan. The Mexican peso led gains among emerging market peers after people familiar with the plans said President Donald Trump and his Mexican counterpart, Claudia Sheinbaum, plan to speak by phone, raising hopes for progress in trade discussions. Over in stocks, the MSCI Emerging Market Index fell to a two-week low. Stocks on mainland China and Hong Kong declined more than 1.5% following weaker-than-expected PMI data and as traders await the outcome of US-China trade talks. Benchmarks in South Korea also fell as disappointing earnings from Samsung Electronics Co. weighed. "Tariffs continue to impact sentiment and activity,' said Tony Sycamore, an analyst at IG in Sydney. "There remains some uncertainty as to whether China and the US can extend their trade pause for another 90 days.' --With assistance from Matthew Burgess. -- ©2025 Bloomberg L.P.
Business Times
14-07-2025
- Business
- Business Times
Indonesia bonds may gain more on dovish policy, fiscal outlook
[JAKARTA] Bank Indonesia's (BI) dovish stance and easing concerns over the nation's fiscal policy are fuelling expectation that government bonds will extend their rally into the second half of the year. The benchmark 10-year yield, which stood at 6.6 per cent on Friday (Jul 11), may fall to as low as 5.8 per cent by year-end, local brokerage Sucor Sekuritas estimated. Aberdeen Group expects the five-year yield to fall well below 6 per cent. Asian sovereign bonds, including Indonesia's, have enjoyed a strong run this year as investors increasingly pivot away from US dollar assets. A sustained upswing in one of the largest emerging Asia bond markets would underscore how global investors, navigating Trump-era tariffs and geopolitical tensions, are moving more towards economies with improving fiscal outlooks and accommodative monetary policy. 'The prospect of further monetary easing provides a supportive backdrop for the bond market,' said Shier Lee Lim, macro strategist at Convera Singapore. Indonesian bonds have returned over 5 per cent so far this year. Though they lag regional peers, they have climbed steadily, particularly starting in April, as government auctions draw robust demand. Foreign investors have poured US$3.6 billion into government bonds on a net basis as at early July, driving the 10-year yield down more than 60 basis points since a March peak. Meanwhile, investors' bids in most auctions since May were more than three times the sale targets, data compiled by Bloomberg shows. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up BI governor Perry Warjiyo last month said the central bank will monitor the scope for an interest rate cut, depending on global conditions and rupiah stability. BI has lowered the rate by a total 50 basis points this year, with some analysts expecting another half-point cut this year. Further helping the sentiment is the central bank's moves to lower the yields on its short-term bills, known as SRBI, and redeem maturing bills to steer investors to sovereign debt. That coincides with US dollar weakness, which is expected to continue and may boost the rupiah, which would enhance local bonds' appeal. 'We are unlikely to see longer-end yields revisit the highs last seen in March for the rest of the year', if there are no negative fiscal surprises, said Audrey Ong, currency and emerging markets macro strategist at Barclays. The government's budget deficit for this year is expected to widen to 2.8 per cent of gross domestic product from its previous target of 2.5 per cent. But Finance Minister Sri Mulyani Indrawati calmed investors' nerves when she said cash reserves will be used to plug the deficit in order to limit bond issuance this year. 'We see fair value of Indonesia 10-year government bond at roughly 6.5 per cent, which is basically neutral, but we are more bullish on shorter tenors,' said Fesa Wibawa, investment analyst at Aberdeen Group. BLOOMBERG
The Star
11-07-2025
- Business
- The Star
Bond outflows may prove short-lived after OPR decrease
June's bond sell-off was mainly driven by cooling bets on ringgit gains, according to BNP Paribas. KUALA LUMPUR: The country's sovereign bond market looks poised to bounce back from recent selling pressure, after a rate cut this week that may fuel bets on further easing. Bank Negara lowered borrowing costs for the first time in five years on Wednesday, calling it a 'pre-emptive measure' in the face of growing risks for the South-East Asian nation's economy. The move came after foreign investors sold a net US$676mil last month, following three months of inflows, data from Bank Negara showed. A shift to easing underscores policymakers' concerns about the fall-out of recent US tariffs on Malaysian goods, which were raised to 25% this week. That could ramp up the pressure on an economy that had suffered three consecutive quarters of slowing growth by the end of March, suggesting more room for monetary easing – and a rebound in bond demand. The central bank's 'accompanying dovish assessment of downside growth risks from external factors, such as uncertain US tariff policy, could spur bets of further rate reductions,' said Chua Han Teng, a senior economist at DBS Bank. This may result in 'returning of foreign portfolio inflows into Malaysia's government debt securities, reversing the temporary outflows in June 2025'. Still, market watchers will be monitoring whether the outflows persist amid evolving global risk sentiment, US trade policy developments and the uncertainty about Malaysia's growth outlook, said Shier Lee Lim, a foreign-exchange and macro strategist at Convera in Singapore. 'At this stage, the market remains focused on these drivers, and flows could remain sensitive to shifts in the external environment.' June's bond sell-off was mainly driven by cooling bets on ringgit gains, according to BNP Paribas. The currency has risen 5% against the dollar this year, partly the result of firms being encouraged by authorities to repatriate overseas income. Malaysia's bonds still have some appeal, with foreign holdings of the bonds likely 'rising in the medium to longer term,' according to Winson Phoon, head of fixed income research at Malayan Banking Bhd in Singapore. Value in the short-end appears fair and returns are seen toward the 30-year part of the curve, he added. — Bloomberg
Malaysian Reserve
10-07-2025
- Business
- Malaysian Reserve
Malaysian bond outflows may prove short-lived after rate cut
MALAYSIA'S sovereign bond market looks poised to bounce back from recent selling pressure, after a rate cut this week that may fuel bets on further easing. Bank Negara Malaysia (BNM) lowered borrowing costs for the first time in five years on Wednesday (July 9), calling it a 'preemptive measure' in the face of growing risks for the Southeast Asian nation's economy. The move came after foreign investors sold a net US$676 million (RM2.87 billion) last month, following three months of inflows, data from BNM show. A shift to easing underscores policymakers' concerns about the fall-out of recent US tariffs on Malaysian goods, which were raised to 25% this week. That could ramp up the pressure on an economy that had suffered three consecutive quarters of slowing growth by the end of March, suggesting more room for monetary easing — and a rebound in bond demand. The central bank's 'accompanying dovish assessment of downside growth risks from external factors, such as uncertain US tariff policy, could spur bets of further rate reductions,' said Chua Han Teng, a senior economist at DBS Bank. This may result in the 'returning of foreign portfolio inflows into Malaysia's government debt securities, reversing the temporary outflows in June 2025'. Still, market watchers will be monitoring whether the outflows persist amid evolving global risk sentiment, US trade policy developments, and the uncertainty about Malaysia's growth outlook, said Shier Lee Lim, a FX and macro strategist at Convera in Singapore. 'At this stage, the market remains focused on these drivers, and flows could remain sensitive to shifts in the external environment.' June's bond selloff was mainly driven by cooling bets on ringgit gains, according to BNP Paribas. The currency has risen 5% against the dollar this year, partly the result of firms being encouraged by authorities to repatriate overseas income. Malaysia's bonds still have some appeal, with foreign holdings of Malaysian bonds likely 'rising in the medium- to longer term,' according to Winson Phoon, head of fixed income research at Malayan Banking Bhd in Singapore. Value in the short-end appears fair and returns are seen towards the 30-year part of the curve, he added. –BLOOMBERG
Business Times
16-05-2025
- Business
- Business Times
Foreigners revisit Indonesia stocks on easing economic concerns
[JAKARTA] Indonesian stocks are poised for their first monthly inflow since September as subsiding economic concerns and attractive banking shares lure investors. The country's equity market posted US$83.8 million in net foreign inflows as at May 15 after seven straight months of outflows. That comes as the Jakarta Composite Index (JCI) nears a bull market, having recovered by roughly 18 per cent from a low in early April after the US paused reciprocal tariffs. The flows indicate appetite for the nation's shares is returning after worries about slowing economic growth, the new government's fiscal policy and global trade tensions hurt confidence towards local stocks over the past few months. 'Technical trading signals suggest positive momentum in the short to medium term for the JCI,' said Shier Lee Lim, lead FX and macro strategist at Convera Singapore. Heightened investor interest in bank stocks within South-east Asian markets is also helping the index, she added. Financials make up about 34 per cent of the benchmark, according to data compiled by Bloomberg. Still, further gains could be at risk as the gauge's current rally is not supported by strong economic fundamentals, according to a note by Rully Arya Wisnubroto, an analyst at PT Mirae Asset Sekuritas Indonesia. The country's economy in the first quarter grew at the slowest pace in more than three years. BLOOMBERG
