FILE PHOTO: A logo of the Bangko Sentral ng Pilipinas (Central Bank of the Philippines) is seen at their headquarters in Manila, Philippines April 28, 2016. REUTERS/Romeo Ranoco/File Photo
Central banks in Southeast Asia are expected to retain cautious, defensive stances on their domestic currencies amid the renewed strength of the US dollar, analysts said.
While the ongoing technical-level talks between Iran and the United States may have lifted sentiment in the Asian currency market, they noted that US monetary policy and the "idiosyncratic risks" of each member state of the Association of Southeast Asian Nations will continue to pressure Asian currencies.
The Oversea-Chinese Banking Corporation, or OCBC, in Singapore said in its latest research note that energy price pressures and the US Federal Reserve's approach will keep the central banks of India, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam "on a hawkish bias".
Roman Ziruk, a senior market analyst at Ebury, a London-based fintech company, said the Strait of Hormuz reopening and a significant decline in oil prices are improving inflation prospects across the region, easing some of the central banks' biggest concerns.
