The MSCI emerging markets currencies index was slightly higher, even as it was hovering near a month’s low

Most Asian currencies were muted on Thursday, while equities struggled to make headway, as markets digested a dim economic outlook from China along with a scaling back of bets on rate cuts by the U.S. central bank.

The MSCI emerging markets currencies index was slightly higher, even as it was hovering near a month’s low.

At 0330 GMT, the dollar index, which measures the greenback against six major peers, was at 103.29.

Investors remained cautious about China as weak economic data from Asia’s biggest trading partner showed the persistent pressure of a protracted property crisis and subdued demand.

The yuan was flat, while Chinese stocks dropped as much as 2.4% to reach around a three-year low.

The South Korean won and the Taiwan dollar were the lead gainers for the day, gaining as much as 0.2% each, even as the former lingered near its November lows.

Asian currencies, mainly the Korean won and Taiwan dollar have seen quite a tear of late, given the less favourable mix of sell-off in equities, higher yields, China growth concerns and geopolitical risks, said Christopher Wong, a currency strategist at OCBC.

Citi analysts estimated there was a combined $5.2 billion of net capital outflows in Asia due to a dollar short squeeze, especially from Taiwan, South Korea and China, the biggest since China’s COVID lockdowns and the Russia-Ukraine conflict’s escalation in March 2022.

Wong, however, sees a return of portfolio inflows into Asia because central bank pivots are still expected this year.

Eventually a less restrictive rate environment along with exports recovery in the region with a turnaround in tech down-cycle should still support a return of flows to the region, he added.

Other Asian currencies like the Philippines’ peso eked out marginal gains, while the Indonesian rupiah and the Singapore dollar were flat.

Among Asian equities, those in Bangkok, Manila and Kuala Lumpur were down between 0.2% and 1%, while those in Singapore and Jakarta added 0.2% and 0.7% respectively.