Asian FX rally fizzles as dollar firms; stocks at 9-month high
Emerging Asian currencies pared early
strength on Friday as the greenback gained footing ahead of U.S.
inflation data, while overnight data highlighting a resilient
U.S. economy boosted regional shares to a near nine-month high.
The Philippine peso shed gains to trade flat,
while the Malaysian ringgit edged 0.2% higher, owing to
firmer crude oil prices.
Both the currencies were poised for their third weekly
climb, with the latter rising nearly 4% year-to-date, just
behind the top-performing Thai baht.
On the other hand, the Pakistani rupee’s steep fall
against the dollar over the previous two days showed signs of
steadying on Friday on hopes of a bail-out package by the
International Monetary Fund.
MSCI’s broadest index of Asia-Pacific shares outside
Japan rose as much as 0.55% to hit an almost
nine-month high, with Jakarta shares leading with a 0.8%
U.S. GDP data led to “optimism that the Federal Reserve may
be able to engineer a soft landing,” aiding risk sentiment in
Asian markets, according to OCBC analysts.
Investors await the U.S. personal consumption expenditures
(PCE) data, the Fed’s preferred inflation measure, which could
build the case for a 25-basis-point rate hike by the central
bank next week.
The dollar rose 0.2% against a basket of peers, but
was still on course for a marginal decline this week.
The baht, which has emerged as a top beneficiary of
China’s abrupt dismantling of its COVID-19 curbs, slipped 0.4%
and was set to snap a five-week winning streak.
Indonesia’s rupiah fell 0.2%, after making strong
gains earlier in the week, setting it up for a third straight
A Reuters poll showed investors were bullish on all nine
Asian emerging currencies for the first time in nearly two
years, as a fizzling U.S. dollar rally and China’s pivot from
its strict COVID-19 curbs boosted appetite for riskier assets.
“The rebuild in FX reserves bolsters the constructive
outlook on Asia FX amid the China reopening story, but we are
hesitant to chase it as a lot is in the price,” TD Securities
analysts said in a note.
After a slew of rate hikes in 2022, more central banks in
Asia dialed back on their policy-tightening rhetoric last week,
on signs of peak inflation in most regional economies, except
The Malaysian central bank stood pat on interest rates,
Indonesia signaled an early end to its cycle and Thailand’s
central bank hinted at measured tightening ahead.
Seoul shares gained 0.6% while those in Thailand
and Singapore rose 0.5% each.
Indian stocks dropped nearly 1.6%, dragged lower by
financials on risk aversion due to Hindenburg’s report on the
books of Adani Group companies.
** India’s Union budget due to be presented on Feb. 1, and
the government will likely borrow a record 16 trillion rupees in
the fiscal year ending March 2024, according to a Reuters poll
** South Korea’s won was down 0.1% while the
Singapore dollar fell 0.2%
** India’s Adani Enterprises Ltd began a record
$2.45 billion secondary share sale for retail investors on
Friday, as a heavy selloff in Adani group companies intensified
after an attack by a U.S.-based short seller
Asia stock indexes and
currencies at 0656 GMT
COUNTRY FX RIC FX FX INDE STOCKS STOCKS
DAILY YTD % X DAILY % YTD %
Japan +0.02 +0.71 <.n2>
India +0.01 +1.40 <.ns ei>
Indones -0.30 +3.84 <.jk ia se>
Malaysi +0.24 +3.95 <.kl a se>
Philipp +0.02 +2.18 <.ps ines i>
Singapo -0.24 +1.89 <.st re i>
Taiwan -0.12 +1.12 <.tw ii>
Thailan -0.38 +5.11 <.se d ti>
(Reporting by Savyata Mishra in Bengaluru; Editing by Gerry
Doyle and Sherry Jacob-Phillips)
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