Asia currencies rise as investors eye U.S. inflation, China caps gains
Most emerging Asian currencies rose on
Wednesday as risk appetite improved on hopes that the U.S.
Federal Reserve would pare back the scale of future interest
rate hikes, but downbeat data and rising COVID-19 cases in China
capped broader gains.
Investors were looking towards U.S. inflation data on
Thursday to see whether it would boost the case for a slowdown
in the Fed’s tightening cycle. Economists expect core inflation
to decline both on a monthly and annual basis.
The Fed said last week its battle against inflation
will require borrowing costs to rise further but
signaled it may be nearing an inflection
point in what has become the swiftest tightening of U.S.
monetary policy in 40 years.
“The U.S. dollar continued to trade with a heavy bias as
markets indulged in (the) Fed calibration narrative,” said
Christopher Wong, a currency strategist at OCBC Bank.
Among Asia’s emerging market currencies, the South Korean
won and Thai baht benefited the most from this backdrop so far
“We reiterate that a more moderate USD profile should
create a conducive environment for stretched Asian FX to
rebound,” Wong said.
The South Korean won strengthened 1.6% to lead
gains, Indonesia’s rupiah rose for the third straight
day, and the Philippine peso edged 0.2% higher.
Stocks in Manila clawed back from a 0.8% drop earlier
to trade about flat by 0410 GMT. The Philippines revised upwards
its second-quarter growth figures, ahead of a third-quarter
readout due on Thursday.
The Chinese yuan remained the only laggard,
weakening 0.2%, as factory gate prices in the world’s
second-largest economy dropped for the first time since December
“With China’s weak activity data, soft non-food price
inflation indicates an economy suffering from weak demand,” said
Stephen Innes, managing partner at SPI Asset Management.
“Unlike its Asian peers, China’s inflation leaves currency
authorities open to CNY weakness, albeit at a pace that does not
In Malaysia, the ringgit firmed 0.4% and stocks
rose modestly. A Reuters poll showed the economy was
poised to grow in the double digits for the first time in over a
year in the third quarter, even as the outlook remained hazy.
The ringgit, which has fallen almost 12% against the U.S.
dollar so far this year, hit a near 25-year low last week and
has hovered around that level since. Analysts suggest some
pressure may persist until after this month’s general election.
“Rising COVID cases in China, domestic elections uncertainty
etc could continue to weigh on the ringgit in (the) near-term.
Historically, elections-induced currency caution could persist
for 1-2 quarters until signs of credible policymaking emerges,”
analysts at Maybank said.
** China’s COVID epicenter shifts to Guangzhou as outbreaks
** Taiwan October exports edge down but chip demand holds up
** Thailand scraps plan to allow foreigners to buy land
Asia stock indexes and
currencies at 0411 GMT
COUNTRY FX RIC FX FX INDE STOCKS STOCKS
DAILY % YTD % X DAILY YTD %
Japan +0.06 -20.9 <.n2> ! !
India +0.47 -8.84 <.ns ei>
Indonesi +0.31 -8.92 <.jk a se>
Malaysia +0.42 -11.6 <.kl se>
Philippi +0.16 -12.1 <.ps nes i>
Singapor -0.08 -3.60 <.st e i>
Taiwan +0.50 -13.2 <.tw ii>
Thailand +0.22 -9.40 <.se ti>
(Reporting by Jaskiran Singh and Navya Mittal in Bengaluru;
Editing by Ana Nicolaci da Costa)
Comments are closed.