BANGKOK: The Malaysian ringgit and Indonesian rupiah experienced gains on Monday, while the Thai baht faced a decline as Asian markets reacted positively to a modest rise in US inflation last month, easing concerns about future US interest rate adjustments.
The ringgit, which has been the region's top performer this year, ended a 10-day losing streak with a 0.5% increase. The rupiah, which has seen a nearly 5% decline this year, rose by 0.4%.
Regional equities also saw a boost, with stock indexes in Seoul and Jakarta each gaining over 1%. Taipei recorded its best session in two months, rising by 2.5%.
The Federal Reserve's recent projection of a gradual pace for rate cuts led to a surge in Treasury yields and the US dollar, prompting several central banks, including those in India and Indonesia, to intervene in currency markets to stabilize their currencies.
Concerns about higher US rates potentially leading to capital outflows and currency weakness were somewhat alleviated following Friday's inflation data, which indicated only a modest increase in November.
The dollar index remained steady at 107.72 after the data release.
Analysts noted that not all regional central banks align with the Federal Reserve's policy direction when making their own monetary policy decisions.
In Indonesia, the central bank maintained interest rates as expected, while the Bangko Sentral ng Pilipinas eased its monetary policy despite the Fed's hawkish stance.
In Malaysia, domestic fundamentals are projected to remain robust despite global economic uncertainties, according to a currency strategist.
In contrast, the Thai baht fell by as much as 0.5%, even as the stock market rose by 0.3%. Top officials in Thailand have called for urgent interest rate cuts to address economic challenges, citing concerns over high household debt levels.