A rally in Southeast Asia’s currencies is petering out as a global surge in coronavirus infections tampered vaccine optimism. Policy outlooks by three central banks this week may offer clues for growth expectations.

Bank of Thailand and Bank Indonesia, whose currencies rallied the hardest last week, will be under scrutiny for any signs of alarm at the pace of appreciation and potential dovish tilts that could diminish their yield advantage. Bangko Sentral ng Pilipinas said last Wednesday there’s room to cut its reserve requirement ratios.

“We see two themes driving markets into year-end,” says Divya Devesh, head of Asean and South-Asia FX research at Standard Chartered Plc in Singapore. “Firstly the search for yield and secondly re-rating of growth expectations following vaccine confirmation.”

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