May 22 (Reuters) - Emerging Asian currencies strengthened for a third consecutive session on Thursday, buoyed by weakness in the U.S. dollar, while regional equity markets were subdued due to concerns over the deteriorating U.S. fiscal outlook.
The Sri Lankan rupee LKR= opened little changed after the central bank unexpectedly lowered interest rates by 25-basis-points, in a bid to boost economic growth after a financial crisis.
The currency has gained about 0.8% since hitting multi-month lows in early April. Equities in Sri Lanka .CSE rose 0.2% on the day.
Among other currencies, the Taiwan dollar TWD=TP and its Singaporean counterpart gained 0.5% and 0.1%, while the Thai baht THB=TH added 0.3%.
Investor focus remained on U.S. President Donald Trump's tax bill, set for a congressional vote this week, amid concerns it could add about $3.8 trillion to the nation’s $36 trillion debt burden.
Christopher Wong, an FX strategist with OCBC said concern over the fiscal health of the United States was hurting sentiment for the dollar.
"The softer U.S. dollar outlook allows for some Asian FX, including laggard Indonesia rupiah to play catch," he said.
The U.S. dollar fell for a fourth consecutive session while longer-dated U.S. Treasury yields hit their highest in 18 months on Thursday as markets lacked visibility on economic and fiscal plans in the world's largest economy.
The Indonesian rupiah IDR= was the top gainer among its regional peers, rising up to 0.6% to hit its highest in over two months. The currency was set for a sixth-straight session of gains and has risen over 4% since its record low on April 9.
Equities in Jakarta .JKSE added 0.6%, the sole gainer among its regional peers.
The domestic central bank signaled its readiness to stabilise the rupiah at a time of ongoing trade war uncertainty, following a cut to its benchmark interest rate aimed at supporting a slowing economy.
Bank Indonesia (BI) "remains vigilant and will not hesitate to stabilise the rupiah through market intervention," said central bank governor Perry Warjiyo.
Analysts at Citi wrote in a note that they expect a pause after the May BI rate cut, "in light of the Federal Reserve being in wait & see mode and apparent weakness in domestic monetary policy transmission".
Elsewhere, the Philippine peso PHP= gained the least among Southeast Asian currencies, rising 0.1%. The benchmark index in Manila .PSI was set for its sixth day of losses out of the last seven. It was last down 1.3%.
Political uncertainty is mounting in Philippines after President Ferdinand Marcos Jr. asked his entire cabinet to resign, following a disappointing showing by his allies in last week's Senate elections.
Other stock markets in emerging Asia fell, with stocks in Taiwan .TWII, Singapore .STI and South Korea .KS11 falling 0.8%, 0.3% and 1.2% respectively.
Asian currencies and stocks as of 0433 GMT | ||||||
COUNTRY | FX RIC | FX DAILY % | FX YTD % | INDEX | STOCKS DAILY % | STOCKS YTD % |
Japan | JPY= | +0.22 | +9.64 | .N225 | -1.15 | -6.20 |
China | CNY=CFXS | -0.01 | +1.33 | .SSEC | 0.00 | 1.07 |
India | INR=IN | -0.04 | -0.06 | .NSEI | -1.00 | 3.90 |
Indonesia | IDR= | +0.40 | -1.44 | .JKSE | 0.57 | 1.46 |
Malaysia | MYR= | +0.28 | +5.01 | .KLSE | -0.89 | -6.77 |
Philippines | PHP= | +0.01 | +4.37 | .PSI | -1.33 | -3.65 |
S.Korea | KRW=KFTC | -0.57 | +6.71 | .KS11 | -1.17 | 8.14 |
Singapore | SGD= | +0.04 | +5.94 | .STI | -0.33 | 2.17 |
Taiwan | TWD=TP | +0.45 | +9.19 | .TWII | -0.73 | -6.03 |
Thailand | THB=TH | +0.21 | +5.09 | .SETI | -0.12 | -15.85 |