BENGALURU: The Malaysian ringgit and Indonesia's rupiah led gains in Asian currencies on Thursday, while most equity markets in the region were tepid as a rebound rally fizzled out, with Taiwan and South Korea falling the most due to a tech sell-off.
Taiwan stocks dropped 2 per cent, with heavyweight TSMC retreating as much as 3.6 per cent. The benchmark index was on course for a fourth straight weekly decline, the longest streak of weekly falls since December 2022.
South Korea's KOSPI was down 0.5 per cent after sliding as much as 1.9 per cent earlier, as chip and battery makers tracked a slump in the tech-heavy Nasdaq index overnight.
Equities in Indonesia dipped 0.3 per cent, while Singapore shares inched up 0.4 per cent.
"It is quite clear that sentiment remains fragile and we caution that there could be some volatility from jobless claims data in the U.S. tonight, especially if it reinforces the narrative of a recession," said Saktiandi Supaat, chief FX strategist at Maybank.
The steep sell-off in risk assets earlier this week was exacerbated by a number of factors including the unwinding of yen carry trade, lukewarm tech earnings and fears of a U.S. recession after a soft jobs report.
Currencies in the region appreciated as the dollar hovered near the seven-month low it touched on Monday.
Malaysia's ringgit jumped 0.6 per cent. It has rallied sharply since mid-July and is the only Asian currency to log a year-to-date gain so far.
"There is more positive idiosyncratic optimism towards the MYR amid government reforms, better-than-expected growth and more foreign investor interest," Supaat said.
Coordinated conversions into the local currency by government-linked companies have also given support to the ringgit, he added.
The Indonesian rupiah appreciated 0.7 per cent to breach the psychological 16,000-level for the first time since late-May, helped by more inflows and easing inflation.
In Thailand, the Constitutional Court on Wednesday ordered the dissolution of anti-establishment opposition party Move Forward, which won the most seats in the 2023 election.
However, there was little impact on the baht, which followed regional trend to rise 0.6 per cent.
The Philippine peso gained 0.7 per cent after data showed that the domestic economy expanded slightly faster than expected in the second quarter.
Meanwhile, the Indian rupee was flat, while stocks erased losses after dropping as much as 0.7 per cent.
The Reserve Bank of India kept key interest rate unchanged, as expected, and maintained its hawkish policy stance.