Philippines peso, Indonesian rupiah lead losses in Asian FX; stocks down

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The Philippines peso and the

Indonesian rupiah were the worst hit among Asian currencies on

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Wednesday, while sentiment for most equities soured as China’s

struggles with surging COVID-19 cases led to worries about

economic growth.

Investors were optimistic after China, the largest trade

partner in Asia, said on Tuesday it would relax inbound

quarantine restrictions, its latest move in dismantling the

world’s strictest COVID regime of lockdowns.

But the optimism soured as an unprecedented rise in COVID-19

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cases has strained China’s hospital resources and rekindled

worries about growth and demand in Asia’s largest economy.

“The tricky part is that even though the Chinese government

is working hard to open the domestic economy with an easing of

COVID measures, or even eliminating most of them, the timing is

not perfect,” analysts from ING said.

ING analysts predict the United States and Europe could fall

into a recession in the first half of 2023, which would result

in external demand falling and ultimately derail China’s

recovery.

There is also a fear that continued aggressive interest rate

hikes by the major central banks could bring more pain to

emerging markets.

The Philippines peso and the Indonesian rupiah

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lost around 0.5% and 0.4%, respectively.

Other Asian units such as the Malaysian ringgit,

Indian rupee and Thai baht slipped between

0.1% and 0.2%.

The rupee was set to record a double-digit decline, of more

than 10%, for the year, with only two trading days left.

A higher dollar, due to a spike in the benchmark U.S.

Treasury yields, also led market players away from Asian assets,

with investors looking forward to more cues from the U.S.

Federal Reserve on interest rates and price pressures going

forward.

At 0711 GMT, the dollar index, which measures the

strength of the greenback against six major currencies, was at

104.2.

Fed officials have consistently maintained that although

inflation may have peaked, there is still a lot to do to bring

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down price pressures and stimulate economic growth.

South Korean stocks led the laggards among Asian

stocks, falling more than 2%, while others such as Taiwan

, Philippines and Indonesia were between

0.2% and 1.3% lower.

HIGHLIGHTS:

** Indonesian 10-year benchmark yields rise 2.6 basis points

to 6.935%

** POLL-South Korea Dec exports to fall for third month as

China demand still weak

Asia stock indexes and currencies

at 0711 GMT

COUNTRY FX RIC FX FX INDEX STOCKS STOCKS

DAILY % YTD % DAILY YTD %

%

Japan -0.34 -14.0 <.n225>

China >

India -0.07 -10.3 <.nsei>

Indonesi -0.32 -9.29 <.jkse a>

Malaysia -0.16 -5.94 <.klse>

Philippi -0.41 -9.08 0.02 -7.81

nes

S.Korea >

Singapor -0.01 +0.11 -0.11 4.46

e

Taiwan -0.10 -9.87 <.twii>

Thailand -0.23 -3.75 <.seti>

(Reporting by Archishma Iyer in Bengaluru; Editing by Savio

D’Souza)