(Jan 20): Most Asian currencies strengthened on Monday, supported by a pause in the dollar rally ahead of US President-elect Donald Trump's inauguration, while most regional equity indexes climbed on improved trade sentiment.

China kept its lending rates unchanged for the third consecutive month, as expected, due to concerns over yuan weakness. Yuan appreciated 0.1%, while stocks reversed earlier gains to trade flat.

The MSCI's index, which tracks emerging market currencies rose 0.2% to its highest point in two weeks.    

The Singaporean dollar rose 0.4% to its strongest level against the greenback in two weeks, ahead of the Monetary Authority of Singapore's policy decision this week.

Analysts widely expect the MAS to ease its monetary policy in its January meeting.

Trump will take the oath of office at noon Eastern Time (1700 GMT), and markets globally are likely to be on a high alert for any whiff of tariff policy announcements during the early hours of his second presidential term.

Kunjal Gala, London-based head of global emerging markets at Federated Hermes, played down the impact of tariffs stating they will primarily be used as a negotiating tactic.

"Despite the negative headlines, we do not believe that a Trump presidency 2.0 will undermine the structural growth drivers that support EM," Gala said.

Thailand's baht gained 0.6% to its highest level since Jan 2, while stocks rose 0.2%. Rupiah, the worst-performing unit so far this year, inched lower.

Meanwhile, a phone call between Trump and Chinese President Xi Jinping around TikTok, trade and Taiwan helped regional stocks edge higher.

"The news was nothing more than a sugar hit and won't last because the material tariffs risks haven't subsided," said Kyle Rodda, senior financial market analyst, Capital.com.

"But for traders, it helps define and understand the narrative."  

Stocks in Indonesia, the largest economy in Southeast Asia, were last up 0.5% after having risen as much as 0.7% to their highest levels since mid-December. Equities in Malaysia edged 0.1% higher, while Philippine stocks shed early gains to trade 0.3% lower.   

This week, investors will be awaiting an interest rate decision from the Bank Negara Malaysia, where the central bank is likely to keep its overnight rates unchanged at 3.00%.

These policy decisions will follow rate moves from Bank Indonesia and Bank of Korea last week, which diverged from market expectations, underscoring the trade-off between growth and currency stability faced by Asian central banks.

Uploaded by Magessan Varatharaja