Asian FX gains on as risk appetite improves; yuan drops
Most emerging Asian currencies traded
higher on Wednesday, as risk appetite improved on hopes that the
U.S. Federal Reserve would pare back on rate hikes, although
China was an outlier after downbeat data and rising COVID-19
Investors are hoping that U.S. inflation data on Thursday,
which is expected to show a decline both on a monthly and annual
basis, boosts the case for the Fed to slow its tightening cycle.
The central bank raised rates last week but signaled it may
be nearing an inflection point in what has become the swiftest
tightening of U.S. monetary policy in 40 years.
“As the ‘peak Fed’ theme draws closer and terminal rates
converge around 5.0%, the USD higher momentum has taken a pause
(which is) good news for Asia FX and likely provides a cushion
for local risk markets,” said Stephen Innes, managing partner at
SPI Asset Management.
Meanwhile, the Chinese yuan remained the only
laggard for the day, dropping 0.2%, while stocks shed
0.5% as factory gate prices went backwards and consumer
inflation slowed, highlighting concerns over demand and economic
The world’s second-largest economy also saw a surge in new
coronavirus cases in Guangzhou, a global manufacturing hub, and
other Chinese cities, further dampening hopes of any ease in
curbs and restrictions.
“The weak CPI print and 1.5-year low for core inflation
points to weaker consumption in October amid intensified COVID
lockdowns,” said Barclays analysts, lowering their 2022
inflation forecast to 2.0%.
In Asia, the South Korean won strengthened 1.5%
to lead the gainers. Indonesia’s rupiah rose for the
third straight day and the Philippine peso edged 0.1%
Stocks in Manila, however, dropped 0.6% after rising
0.4% earlier in the day. The Philippines revised upwards its
second-quarter growth figures, ahead of a third-quarter readout
due on Thursday.
In Malaysia, the ringgit firmed 0.5% 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 has fallen almost 12% against the U.S. dollar so
far this year. It 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.
** China’s COVID epicenter shifts to Guangzhou as outbreaks
** Palm drops for the second day on higher Malaysian stocks,
tepid China demand
** Taiwan aims for British trade deal as minister meets
Asia stock indexes and
currencies at 0659 GMT
COUNTRY FX RIC FX FX INDE STOCKS STOCKS
DAILY % YTD % X DAILY YTD %
Japan -0.03 -21.0 <.n2>
India +0.53 -8.78 <.ns ei>
Indonesi +0.27 -8.96 <.jk a se>
Malaysia +0.51 -11.5 <.kl se>
Philippi +0.10 -12.1 <.ps nes i>
Singapor -0.07 -3.59 <.st e i>
Taiwan +0.63 -13.1 <.tw ii>
Thailand +0.24 -9.38 <.se ti>
(Reporting by Jaskiran Singh and Navya Mittal in Bengaluru;
Editing by Ana Nicolaci da Costa and Savio D’Souza)
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