Asian currencies subdued after mixed US data, stocks set for weekly gains

Most Asian currencies were subdued on Friday as mixed U.S. data solidified bets of fewer rate cuts, while regional stocks were on track to end the week higher due to gains in South Korea and Taiwan from global tech earnings.

Emerging currencies have recovered slightly this week after suffering steep losses earlier in the month when investors walked away from riskier assets due to uncertainties from heightened tensions in the Middle East.

The broad MSCI emerging markets currency index (.MIEM00000CUS) was up 0.2% for the week so far, compared to declines of 0.4% and 0.5% in the previous two weeks, respectively.

Meanwhile, currencies were further pressured by data showing the U.S. economy grew at its slowest pace in nearly two years in the first quarter, while inflation picked up, suggesting that the Federal Reserve would not cut interest rates before September.

Adding to the downbeat regional mood, the Japanese yen hit a fresh 34-year low on disappointment that the Bank of Japan held rates steady without giving clear guidance on its future rate path.

The South Korean won USDKRW lost 0.3% on Friday, but was on track to post its first weekly gain in seven weeks.

The Malaysian ringgit USDMYR was largely flat and headed for a 0.1% rise for the week, after three consecutive weekly losses.

In Indonesia, the rupiah USDIDR extended losses, despite the central bank's surprise quarter-point rate hike on Wednesday to support the currency in the face of persistent dollar strength.

Still, the rupiah has slightly distanced itself from a four-year low it hit last week. It has gained 0.2% so far this week against a decline of 2.6% in the last week.

In contrast, the Philippines' finance minister said the central bank has no plans to hike interest rates despite the peso's USDPHP weakness against the dollar. The peso has lost 2.9% so far in April and is on course for its fourth straight weekly loss.

"I not convinced that just because of exchange rates (Asian) central banks will start hiking rates again, as some central banks like the Reserve Bank of India (RBI) doesn't seem to be too minded that the currency is on the depreciation trend," said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.

Meanwhile, gains in U.S. tech stocks after upbeat quarterly earnings from giants Alphabet GOOG and Microsoft MSFT buoyed tech-heavy South Korean and Taiwan stock markets.

South Korean stocks KOSPI rose as much as 1.3%, while shares in Taiwan TAIEX gained 1.9% and were on track for their best week since March 4.

Singapore stocks STI were largely unchanged on Friday, but eyeing their best week since January 2021 with a 3.5% rise so far.

Stocks in Thailand SET were flat, on track for the best week since August 2023.

The Vietnamese dong USDVND was 0.1% higher, further distancing itself from its record low hit last week.

HIGHLIGHTS:

** BOJ keeps ultra-low rates, projects inflation near 2% for years

** Singapore c.bank sees inflation "falling more discernibly" in Q4