Weakened Dollar Fails to Lift Asian Currencies Amid Rising Oil Prices

Asian currencies have been experiencing mixed trends due to conflicting forces at play. On one hand, the US dollar has weakened, which tends to support regional currencies and reduce demand for dollars.

The softer US data has cooled expectations for another Federal Reserve rate hike soon, leading to a firmer tone in markets such as Taiwan's and South Korea's. The Taiwanese dollar rose 0.2% to 31.774 per US dollar, while the South Korean won gained 0.5%.

However, rising oil prices due to the Middle East conflict are putting pressure on Asian economies that heavily import fuel. This has caused the Philippine peso to fall 0.3%, and the Thai baht and Singapore dollar each dipped 0.1%. Indonesia's rupiah slipped 0.1% despite a strong couple of weeks for its stocks, which rose 1.3% on the day.

The Bank Indonesia decision to keep its policy rate at 5.75% after last month's surprise pause has also contributed to market uncertainty. The risk of Indonesia's stock market being reclassified to 'frontier' status later on has been highlighted by MSCI, an index provider.