Philippine peso gains on weaker USD, c.bank policy tightening

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The Philippine peso notched its first

gain in four days against the U.S. dollar on Friday, helped by a

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weaker U.S. currency and a central bank rate increase that

matched the Federal Reserve.

The peso rose 0.2%, recouping some of this week’s

losses. Stocks in Manila inched up for the second

straight day and were on track for their best week in three.

The dollar eased 0.1% as investors continued to

wrangle with recent inflation and retail sales data and its

impact on future Fed policy.

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On Thursday, central bank Bangko Sentral ng Pilipinas (BSP)

raised its key policy rate by 75 basis points and

signaled more rate hikes ahead.

“The Fed also looks set to shift to smaller pace of hikes,

which possibly puts less weakening pressures on the PHP against

the USD, and reduces the need for outsized BSP hikes to maintain

reasonable positive interest rate differential,” DBS analysts

said in a note.

The peso has shed 11% of its value so far this year and is

among the worst performing emerging Asian currencies.

Bank Indonesia (BI) also hiked rates by 50 basis points

(bps) on Thursday, as widely expected. The bank’s governor on

Friday forecast inflation to cool further this month, which may

signal a potential slow down in the pace of future rate

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hikes.

Stock markets in Jakarta rose 0.4%. The rupiah

, which has depreciated more than 9% this year, traded

lower for the fifth straight session following last Friday’s

more than 1% surge.

“Overall, Indonesian economic fundamental conditions remain

supportive to create appreciation on Indonesian rupiah,” Maybank

analysts said, adding that there was room for BI to hike by at

least 25 bps in December if the rupiah weakened further.

Regional stock markets were bereft of sharp moves at the end

of a week dominated by U.S. economic data, signals from the Fed

on future policy, and China easing some COVID-19 curbs.

“China easing COVID restrictions attracted short-term equity

investment flows to Asia. Still, the market wants to see China

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remove all zero-COVID policies and provide more growth support,”

said Stephen Innes, managing partner at SPI Asset Management.

The yuan bounced slightly after shedding 1.5%

over the last two sessions as it gained 0.4%. Chinese stocks

were roughly flat, but on track to gain for the third

consecutive week.

HIGHLIGHTS

** Singapore’s 10-year benchmark yield is up 5 basis points

at 3.192%​​

** Inflation data from Singapore, Malaysia due next week

** Thailand awaits Q3 GDP and central bank policy decision

next week

Asia stock indexes and currencies at

0457 GMT

COUNTRY FX RIC FX FX YTD INDEX STOCKS STOCKS

DAILY % % DAILY YTD %

%

Japan +0.21 -17.74 -0.09 -3.08

China +0.40 -10.82 -0.11 -14.50

India -0.01 -8.97 -0.26 5.43

Indonesia -0.19 -9.18 0.54 7.62

Malaysia +0.00 -8.48 0.06 -7.54

Philippin +0.19 -11.06 0.32 -9.81

es

S.Korea -0.09 -11.30 0.25 -17.75

Singapore +0.03 -1.81 -0.33 4.85

Taiwan -0.03 -11.16 -0.27 -20.44

Thailand -0.10 -6.85 0.03 -2.55

(Reporting by Navya Mittal

Editing by Miral Fahmy)