Asian currencies reverse course; won buoyed by rate hike


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Several Asian currencies reversed

course to trade higher versus the dollar in volatile trading

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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

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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

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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


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.

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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.

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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.


** 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



% %

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)



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