Asian currencies reverse course; won buoyed by rate hike

[ad_1]

Article content

Several Asian currencies reversed

course to trade higher versus the dollar in volatile trading

Article content

ahead of some key data releases in the United States, while

South Korea’s won was propped up by an interest rate hike.

The Singapore dollar and the Thai baht

traded about 0.1% and 0.2% higher, respectively, in the latter

half of the day, with the baht also supported by data showing

industrial sentiment had strengthened in September.

“I think, right now, the markets are pretty jittery,” said

Advertisement 2

Article content

Galvin Chia, an emerging markets strategist at NatWest Markets,

adding that risky assets were especially volatile.

The won appreciated 0.7% after the Bank of Korea

(BOK) raised its benchmark policy rate by 50 basis points (bps).

While the hike was in line with market expectations, two of

the BOK’s seven board members had voted for a 25 bps hike.

“This clearly shows that the spectrum of dove-hawk

tendencies is shifting slowly from curbing inflation to

supporting growth,” said analysts at ING, adding the BoK will

likely normalize its hiking pace back to 25 bp in November.

The won has weakened nearly 17% against the U.S. dollar

so far in 2022, the biggest decliner among major Asian

currencies after the Japanese yen, which has lost more

Advertisement 3

Article content

than 21%.

India’s rupee gained a marginal 0.1% with the

Reserve Bank of India likely intervening in small volumes since

Monday, when the currency hit a record low of 82.6825 to the

dollar.

India will also report consumer prices data later on

Wednesday. Inflation is expected to have accelerated to a

five-month high in September, according to a Reuters poll.

The Chinese yuan remained choppy, with

faster-than-expected credit growth in September acting as a

positive but offset by a strong dollar and a negative global

economic outlook.

Malaysia’s ringgit and the Philippines’ peso

also remained pressured, and both traded about 0.2% lower.

Investors are awaiting the minutes from the U.S. Federal

Reserve’s September meeting, and data on U.S. producer prices.

Advertisement 4

Article content

U.S. September consumer inflation data is also due late on

Thursday. Headline inflation is expected to have eased slightly,

according to a Reuters poll.

The negative market sentiment earlier in the day was also in

part due to the Bank of England reiterating it would end support

for the bond market on Friday, but it later backtracked on this,

according to a Financial Times (FT) report.

The FT reported the BoE signaled privately to lenders it

was prepared to extend its emergency bond-buying program

beyond Friday’s deadline.

Further souring risk appetite, the International Monetary

Fund (IMF) cut its outlook for global GDP growth to 2.7% for

2023, down from the 2.9% it had forecast in July, due to

inflation pressures.

Advertisement 5

Article content

Stocks in Asia remained mixed, with markets in Malaysia

and Indonesia falling 0.4% and 0.2%

respectively, while those in China and India

rose 1.4% and 0.7%, respectively.

HIGHLIGHTS:

** Thailand consumer confidence at eight-month high in

September, rises for fourth consecutive month

** Malaysia factory output beats market forecasts, rises

13.6% in August

Asia stock indexes and currencies at

0707 GMT

COUNTRY FX RIC FX FX YTD INDEX STOCKS STOCKS

DAILY % DAILY YTD %

% %

Japan -0.16 -21.23 -0.02 -8.32

China +0.07 -11.28 1.45 -16.95

India +0.08 -9.63 0.65 -1.50

Indonesia -0.06 -7.25 -0.21 5.21

Malaysia -0.19 -11.03 -0.41 -11.89

Philippines -0.24 -13.50 0.11 -17.82

S.Korea +0.72 -16.57 0.47 -26.03

Singapore +0.03 -6.15 -0.22 -0.82

Taiwan +0.04 -13.07 -0.19 -28.20

Thailand +0.21 -12.25 0.07 -5.67

(Reporting by Harshita Swaminathan and Jaskiran Singh; Editing

by Saumyadeb Chakrabarty)

Advertisement

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

[ad_2]

Source link

Comments are closed.