Asian currencies rise on subdued US dollar; stocks mixed

KUALA LUMPUR: Asian currencies inched higher on Monday, with many recording monthly gains, while equity markets were mixed, topping off a month marked by geopolitical uncertainty, the revival of US-China trade talks and a weaker US dollar.

The US dollar wallowed near its lowest in nearly four years against the euro on Monday as market optimism over US trade deals bolstered bets for earlier Federal Reserve interest rate cuts.

Investors are also keeping an eye on US President Donald Trump's massive tax-cut and spending Bill, which is currently before the Senate.

Among currencies which were higher, the Malaysian ringgit and the Philippine peso were up 0.3 per cent and 0.4 per cent, respectively. The Singapore dollar and the Thai baht both inched up 0.1 per cent, while the South Korean won advanced 0.4 per cent. The Taiwan dollar edged lower, however.

June gave investors a lot to chew on. The US and China sent delegates to Geneva to revive a trade truce, tensions flared up in the Middle East that threw oil prices into a frenzy, and uncertainty around the Fed's independence was rife.

Against this backdrop, the won and Taiwan dollar stood out as the region's top performers.

The won rose nearly 2 per cent in June and is up 7 per cent so far this year, putting it on track for its best half since late 2020, while the equity benchmark added 0.8 per cent on Monday and was set for its strongest half-year since the latter half of 2020.

South Korean equities have largely rallied this month as tech stocks advanced on policy optimism under President Lee Jae Myung, who won a snap election on June 3.

The Taiwan dollar was set for its best half-year ever, buoyed this month by expectations of Fed rate cuts, a softer US dollar, and steady foreign capital inflows into the island. Stocks were down 0.7 per cent on the day.

"Markets still hold (a) long position on these currencies as they expect them to be a part of the trade agreement between the US and Taiwan, and the US and South Korea," said Poon Panichpibool, a market strategist at Krung Thai Bank.

Asian currencies have largely held up in the first half of the year despite global headwinds, and Poon expected them to remain resilient in the second half, with the possibility that some central banks could cut interest rates if trade tensions continue to diminish.

Elsewhere in the region, stock markets were mixed with Indonesian stocks and Philippines shares inching 0.2 per cent and 0.4 per cent higher, respectively.

Investors now await inflation data from the Philippines and Indonesia due later this week, while markets are also tracking progress on trade talks ahead of the July 9, 2025 deadline for Trump's reciprocal tariffs.

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