Asian FX subdued on recession fears, Thai baht gains on H2 growth outlook
Most Asian currencies weakened on
Tuesday, a day after grim data from the world’s two biggest
economies reignited worries about a global recession, while the
Thai bhat advanced after the country’s central bank forecast a
rebound in second-half growth.
The Indonesian rupiah, Malaysian ringgit and
the Taiwan dollar weakened between 0.1% and 0.2%
against the U.S. dollar, which hovered near a one-week
high on safe-haven demand.
“Asian markets may range trade today as investors continue
to digest the recent soft economic data coming out from both
China and the U.S., and their implications for policy stimulus,”
analysts at OCBC Bank wrote.
Monday’s underwhelming Chinese activity data spanned
industrial output, retail sales and real estate, which was
followed by frail U.S. single-family homebuilders’ confidence
and weakness in a New York state factory activity survey.
This sent the onshore yuan to as much as 0.5%
lower to touch 6.7950 per dollar, its weakest level since May
Resuming trade after a public holiday, the South Korean won
led the fall in the region with a 0.6% decline and
was on track for its worst day in over a week. But a boost to
chipmaker shares buoyed the country’s benchmark stock index
to its highest level in nearly two months.
“Concerns over moderating external demand is likely to
remain intact in the interim, given traction by softer data out
of China and the U.S.,” analysts at Maybank wrote.
The rupiah extended losses for a second day after the
country’s statistic bureau on Monday warned that its windfall
export earnings, which heavily benefited from high commodity
prices, may start dwindling despite larger-than-expected surplus
The local currency has firmed 0.5% in August so far on a
nascent economic recovery. It had lost over 4% in the first
seven months of 2022.
Indonesia is also one of the few laggards in the region that
is yet to begin monetary tightening, with its central bank set
to meet next week amid strong second-quarter growth and soaring
Bucking the broader trend, the Thai baht rose 0.4%
after the country’s central bank said that the domestic economy
was expected to continue growing in the second half of the year
as tourism picks up, despite a weaker-than-expected second
“We expect the economy to strengthen further in 2H, driven
by a wider reopening from July,” Chua Han Teng, economist at DBS
“Private consumption and tourism, already rising, are set to
gather additional momentum.”
The peso gave away its early gains to inch 0.1%
higher as the country’s central bank was set to deliver a
half-point point rate rise on Thursday, a Reuters poll showed.
The Bangko Sentral ng Pilipinas (BSP) was also widely
expected to hike rates by a quarter-point in September to catch
up with its peers in containing soaring inflation. That would
add to the hefty unscheduled 75 basis point rise in July, its
most aggressive since the central bank shifted to an
inflation-targetting approach in 2002.
** Indonesian 10-year benchmark yields are up 3.2 basis
points at 7.081%
** Leading gains in KOSPI are Samsung Electronics
and peer SK Hynix, up 1.3% and 3.6%,
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(Reporting by Indranil Sarkar in Bengaluru; Editing by Rashmi