Market News

By Catherine Bosley and Malavika Kaur Makol

(Bloomberg) -- Thailand’s baht flip-flopped after the nation’s central bank surprised investors with its first interest rate cut in more than four years. The Philippine peso was little changed after Bangko Sentral ng Pilipinas delivered an expected rate reduction.

Here’s what analysts had to say:

Alan Lau, strategist at Malayan Banking Bhd: 

BOT’s 25-basis-point cut comes as a surprise but the move itself is pretty much in line with the global easing cycle currently taking place. More important going forward for the baht is the external risk such as the US elections uncertainty.

Eddie Cheung, senior EM strategist at Credit Agricole CIB:

The moves today are another reflection of the Fed’s jumbo rate cut opening the door for Asian central banks to move. The dollar and the dollar/onshore yuan remain bigger drivers near-term in our view for the currencies given the upcoming US elections and ongoing processing of the China policy shift.

Philip Wee, a senior FX strategist at DBS Bank Ltd.: 

Not surprised that peso reacted less compared to baht to their rate cut decisions. BSP’s cut was anticipated but BOT’s was a surprise. Technically, dollar/peso has been rising steadily this month and did not mirror dollar/baht pullback from October 8. Think today’s sentiment was supported by stable onshore yuan too, in anticipation of tomorrow’s announcements by China’s housing ministry to support to the property sector.

Lloyd Chan, a currency strategist at MUFG Bank Ltd.

The baht may shrug off this rate cut as the swaps market had been pricing a reduction in the next three months. If anything, the rate cut may complement the government’s stimulus to prop up growth. And with peak tourism season returning this quarter, the baht could be supported.

He retains his forecast for the baht to rise to appreciate to 32.5 per dollar at end of 2024.

Jian Hui Tan, investment strategist at United Overseas Bank: 

I would read it as a small policy normalization step to support economic growth, rather than the BOT now seeing eye to eye with the government.

--With assistance from Karl Lester M. Yap.