Asian FX decline on dollar strength; Philippines inflation soars

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Asian emerging stocks and currencies were trading lower on

Tuesday, hit by regional inflation, extended U.S. Federal

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Reserve rate-hike worries and a firm dollar.

Annual inflation in the Philippines

rose 8.0% in November

from a year earlier, bolstering the case for a

half-percentage point interest rate hike this month.

“Given the elevated inflation, especially rising

pressure from core services inflation, we continue to expect the

BSP (Bangko Sentral ng Pilipinas) to deliver a 50 basis points

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hike in its December meeting,” analysts at Goldman Sachs said.

Phillipines’ central bank has raised rates six times this

year to meet its annual inflation target of 2%-4%. Last week,

its governor flagged another 25 bps or 50 bps hike at the Dec.

15 meeting.

The peso, which has lost about 9% so far this year,

was flat among broadly lower Asian emerging currencies. Stocks

in Manila soared 2.6%.

The dollar index rose 0.2% to 105.42 after strong

U.S. services data strengthened the greenback and fueled bets

over the Federal Reserve maintaining its higher for longer

stance on further interest rate hikes.

Uncertainty over the Fed’s intentions overshadowed

optimism about China beginning to relax its zero-COVID strategy

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and sapped sentiment for risky Asian assets.

Poon Panichpibool, a markets strategist at Krung Thai

Bank, said the U.S. dollar could peak over the

medium-to-long-term, helping Asian currencies outperform the

dollar next year.

South Korea’s won and Indonesia’s rupiah

depreciated 1.8% and 0.7%, respectively, while India’s

rupee fell 0.6%. Malaysia’s ringgit retreated

0.3%.

Thailand’s baht depreciated 0.9%, while stocks

in Bangkok shed 0.4%.

The Singapore dollar appreciated 0.1% – the only

bright spot among Asian emerging currencies.

Equity markets in Asia remained on the backfoot, with stocks

in Jakarta and Mumbai declining 1.4% and 0.4%,

respectively.

HIGHLIGHTS:

** Indonesian 10-year benchmark yields rise 8.2 basis points

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to 6.925%

** India’s economy expected to grow 6.9% this year –

World Bank

** China may announce 10 new COVID easing steps on Weds

-sources

** Investors look to emerging markets as planets align for

end of dollar bull market – analysis

The following table shows rates for Asian currencies against the

dollar at 0622 GMT.

Asia stock indexes and currencies at

0620 GMT

COUNTRY FX RIC FX FX INDE STOCKS STOCKS

DAILY % YTD % X DAILY YTD %

%

Japan -0.28 -16.0 <.n2>

China EC>

India -0.58 -9.65 <.ns ei>

Indonesi -0.74 -8.54 <.jk a se>

Malaysia -0.34 -4.95 <.kl se>

Philippi -0.04 -8.90 <.ps nes i>

S.Korea 11>

Singapor +0.10 -0.57 <.st e i>

Taiwan -0.62 -9.64 <.tw ii>

Thailand -0.90 -4.76 <.se ti>

(Reporting by Upasana Singh in Bengaluru; Editing by Nivedita

Bhattacharjee)