Emerging Asian currencies strengthened against a softer U.S. dollar on Monday, while regional stock markets were largely steady as investors awaited fresh catalysts for direction. The MSCI emerging-market currency index rose 0.2% to a record high, led by gains in the Taiwan dollar, Reuters reported.
The Taiwan dollar climbed 0.5% to its strongest level in more than six weeks, supported by improved sentiment toward the island's technology-heavy economy. Taiwan's stock market also advanced 0.8%, extending a powerful 2026 rally that has lifted its benchmark by 58.7% so far this year.
According to Reuters, continued foreign investor demand for artificial-intelligence-related chipmakers has been a key driver of Taiwan's equity market. HSBC analysts also expect the Taiwan dollar to recover further as dividend-related capital outflows from Taiwan ease.
The broader MSCI emerging-market equities index gained 0.7% to reach its highest level since July 10, with Taiwan among the main contributors. South Korea's KOSPI, another standout performer this year with gains of 65.6%, was closed for a public holiday, while the won strengthened 0.4%, taking its gains for the year to 1.7%.
Reuters reported that HSBC expects the won to receive additional support from foreign investors selling more South Korean equities relative to Taiwanese shares, while South Korean retail investors continue to allocate money to U.S. stocks.
Thailand's baht was little changed after economic data showed the country's economy expanded 1.9% in the second quarter, beating market expectations. The government's state planning agency also raised its full-year growth forecast.
The baht was last up around 0.2%, while Thailand's benchmark stock index gained more than 1%, adding to a generally positive tone in the country's financial markets.
Elsewhere in the region, uncertainty surrounding the Middle East conflict kept several stock markets confined to narrow ranges. A weaker dollar provided broader support for Asian currencies, with the dollar index hovering near its lowest level of the month.
Markets have also adjusted expectations for U.S. monetary policy following softer payroll and inflation data earlier this month, reducing pressure on emerging-market currencies.
Malaysia's ringgit rose 0.2% after data showed consumer prices increased 1.8% in July from a year earlier, slightly below expectations. The figures reinforced expectations that inflationary pressures remain relatively contained.
Japan's economy, meanwhile, expanded at a slower-than-expected pace in the April-June quarter, with weak household spending and business investment weighing on growth. Despite the disappointing data, the yen gained 0.1%, while the Nikkei index rose 0.3%.
According to Reuters, the Japanese growth figures added to uncertainty over the outlook for domestic demand as investors continued to assess the impact of external geopolitical risks on the economy.
Indonesia Awaits Central Bank Decision
Indonesia's financial markets remained closed for a public holiday, with investors turning their attention to Bank Indonesia's monetary policy decision due on Wednesday.
The central bank is widely expected to leave its benchmark interest rate unchanged at 5.75%. The decision follows last month's surprise move to keep rates steady while introducing measures aimed at attracting foreign capital and supporting the rupiah.
With the dollar weakening and Asian currencies gaining ground, investors are now watching upcoming economic data, central bank decisions and developments in the Middle East for clues about the next direction for regional markets.
