Most Asian FX mixed ahead of Lunar New Year; ringgit, peso outliers

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Most Asian currencies took mixed

positions on Friday ahead of the Lunar New Year in the region as

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market participants continued to weigh in on possible rate hikes

by the U.S. Federal Reserve stirring global recessionary fears,

while the Malaysian ringgit and Philippine peso edged higher.

On the eve of the holiday season, Chinese officials said

that the worst was over in their battle against COVID-19 as

China geared up for one of the busiest periods after mass travel

was possible for the first time in nearly three years.

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Reacting to the news, shares in Shanghai climbed

0.7%, while the Chinese yuan continued to edge lower.

The world’s second-largest economy kept its benchmark

lending rates unchanged for the fifth month in a row with

analysts expecting further rate cuts in the future after the

central bank vowed to support the COVID-19-hit economy.

Separately, worries of more Fed tightening were aggravated

by robust U.S. employment data and fresh hawkish rhetoric from

central bank officials.

There are a couple of factors playing together, said Rachana

Mehta, co-head, regional fixed income at Maybank Asset

Management Singapore. “One is China’s reopening and the other

has to do with the slowdown in U.S. growth. So market

participants are torn between these factors. That is what I

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think is driving some markets better than the others.”

With the upcoming Lunar New Year, people are booking in

profits before they go for their holidays, Mehta added.

The South Korean won and Taiwan’s dollar

slid 0.2% and 0.1%, respectively. The Singapore dollar

remained listless.

On the other hand, the ringgit appreciated as much as

0.4% to hit its highest level in nine months, while the Thai

baht and Philippine peso strengthened 0.1% each.

Thailand’s consumer spending is likely to rise 13.6% to 45

billion baht ($1.37 billion) over the Lunar New Year period, a

university survey showed.

“We stay optimistic on the baht as the rapid China reopening

is likely to benefit Thailand from a tourism perspective and

peaking Fed rates may lead to declining yields,” said analysts

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at Maybank.

The Thai government said it expects at least five million

Chinese tourists this year.

Additionally, Malaysian consumer price index (CPI) rose 3.8%

in December, slightly less than forecasts.

.”..We expect headline inflation to continue its downward

trend towards year-end, resulting in an average inflation rate

of 2.8% for the entire year of 2023,” said analysts at UOB.

HIGHLIGHTS:

** Most of the regional markets will be on holiday on Jan.

23

** UPDATE 1-Philippines, U.S. in talks on holding “2-plus-2

meeting” – envoy

** UPDATE 3-Japan’s consumer inflation hits fresh 41-year

high, keeps BOJ in focus

Asia stock indexes and

currencies at 0628 GMT

COUNTRY FX RIC FX FX INDEX STOCKS STOCKS

DAILY % YTD % DAILY YTD %

%

Japan -0.51 +1.57 0.56 1.76

China

India +0.17 +1.85 0.03 0.04

Indonesia +0.13 +3.22 0.14 -0.31

Malaysia +0.37 +2.56 -0.03 0.02

Philippines +0.12 +2.02 -0.13 7.41

S.Korea

Singapore -0.02 +1.35 0.73 1.50

Taiwan -0.12 +1.12 0.04 5.62

Thailand +0.12 +5.28 -0.75 0.43

($1 = 32.8500 baht)

(Reporting by Jaskiran Singh in Bengaluru; Editing by Dhanya

Ann Thoppil)