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Asia, Forex

Malaysia’s ringgit falls off 2-week high after rate cut, Asia stocks fall

* Graphic: World FX rates * Malaysia interest rates cut to record low of 1.75% * Indonesia’s rupiah gains after bond buying details revealed * Philippine inflation picks up in June By Nikhil Nainan July 7 (Reuters) – Malaysia’s ringgit pulled back from a two-week high on Tuesday after its central bank reduced the official interest rate return on the currency by another quarter point, defying the expectations of some market players. The move was the bank’s fourth this year and took rates in the Southeast Asia’s third-largest economy to a historic low of just 1.75% as the bank predicted inflation would move into negative territory this year. Analysts had been split almost down the middle on the outcome of the meeting, with a slim majority expecting a reduction in borrowing costs and two analysts supporting a bigger half point move. The ringgit, which had trended higher in morning trade, dipped to trade flat after the move, while stocks remained in line with regional losses. Elsewhere, Asia’s emerging and developed stock markets cooled off after a recent rally fuelled by recovery hopes and Chinese stock market gains, with South Korean shares the biggest faller with a 1.1% decline. Chinese shares extended their run and rose 1.3%, while Thailand, playing catch-up after a holiday on Monday, was the only southeast Asian country to match those gains. The cut in Malaysia follows similar moves in Indonesia and the Philippines in the last month as policymakers look to soften the economic hit from the pandemic and support recovery. Indonesian officials on Monday laid out details of a $40 billion bond-buying programme. The country’s rupiah advanced more than half a percent on Tuesday. In the Philippines, where COVID-19 infections are still rising, inflation picked up faster than expected in June as economic activity gradually resumed, but economists expect consumption to remain sluggish in the second half. Both Philippine shares and the peso dipped. HIGHLIGHTS: ** Malaysia’s 10-year benchmark yield down 0.5 basis points at 2.927% ** Top Malaysia stock gainers Hong Leong Financial Group Bhd and Top Glove Corp Bhd ** Top gainers on the Thailand’s SETI include Max Metal Corp PCL and AQ Estate PCL Asia stock indexes and currencies at 0720 GMT COUNTRY FX FX FX INDEX STOCKS STOCKS RIC DAILY % YTD % DAILY % YTD % Japan -0.18 +0.99 -0.44 -4.40 China -0.03 -0.83 0.37 9.68 India -0.34 -4.73 -0.09 -11.61 Indonesia +0.54 -3.36 0.08 -20.78 Malaysia +0.05 -4.31 -0.42 -1.16 Philippines -0.41 +2.26 -0.96 -19.81 S.Korea +0.01 -3.29 -1.09 -1.52 Singapore -0.14 -3.56 -0.65 -17.11 Taiwan +0.45 +2.33 -0.20 0.80 Thailand +0.00 -3.89 1.34 -11.98 (Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Patrick Graham and Anil D’Silva)

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