EMERGING MARKETS-Dollar strength weighs on Asian FX; AI stocks extend gains

By Nichiket Sunil

Nov 11 (Reuters) - Asian currencies weakened on Wednesday as the US dollar firmed, while technology stocks in South Korea and Taiwan extended their recovery from a sharp selloff last week that left both markets nursing steep losses.

The dollar hovered near a two-week high in early Asian trade after data overnight showed US core inflation rose 0.3% in October from the previous month.

The reading matched a pace that Federal Reserve Governor Christopher Waller has said would be compatible with a 50-basis-point interest rate increase.

Comments from voting members of the central bank's rate-setting committee signalling continued concern over elevated inflation further bolstered expectations for additional rate hikes.

The benchmark two-year Treasury yield , which is particularly sensitive to interest-rate expectations, climbed overnight to its highest level since October 28.

Higher US yields and a firmer dollar weighed on Asian currencies as investors reassessed the appeal of emerging-market assets.

"Beyond the immediate data risk, we continue to favour a selective recovery in Asian currencies over the medium term, particularly if US rates pressure eases and lower oil prices provide some respite to net oil importers," said Christopher Wong, FX strategist at OCBC.

The Thai baht lost 0.5%, while the Malaysian ringgit weakened to 4.073 per US dollar, its lowest level in a week.

Meanwhile, technology-heavy stock markets in South Korea .KS11 and Taiwan .TWII extended gains, building on a rebound from a recent AI-led selloff after strong earnings from CoreWeave CRWV.O helped reassure investors about demand for AI infrastructure.

Indonesian stocks .JKSE were little changed ahead of MSCI's November index review due later in the day, while the rupiah weakened to 18,150 per dollar.

Investors remained cautious after MSCI warned the country could risk losing its emerging-market status.

In response to concerns raised by MSCI, the Indonesia Stock Exchange recently removed the 5 trillion rupiah market-cap threshold from its screening of companies that breach high shareholding concentration rules, as it seeks to improve market transparency.

With oil prices holding below $100 a barrel, sentiment remained supportive for crude-importing economies such as Thailand and Singapore.

Thailand's benchmark index .SETI advanced 0.4%, while Singapore .STI climbed 1.1%. Malaysian equities .KLSE, however, bucked the broader trend to fall 0.6%.

HIGHLIGHTS:
** Anthropic eyes $1.4 trillion IPO valuation in test of Wall Street's AI fervor
** Microsoft presses Trump to scuttle ban on Chinese data center tech
** SoftBank books $7 billion quarterly loss on US data centre hit, financing costs