Thai baht soars 1% on rate hike drum roll; S.Korea’s won slips
The Thai baht appreciated more than 1% on Monday, logging a strong start
to the month which is expected to see the country finally join its regional and global peers in
normalizing its pandemic-era stimulus policy as the economy gains traction.
Japan’s yen was trading at an over six-week high, firming more than half a percent as
the U.S. dollar drifted near its three-week low, while rest other Asian currencies traded
slightly lower against the greenback.
The Thai baht, opening after an extended weekend, jumped as much as 1.3% to 36.160
per dollar – its best intraday move since May 5 – after the central bank on Friday said it was
highly likely to raise its key policy rate next week, its first hike since late 2018.
“Although several Asian central banks have surprised markets on the hawkish side this year,
Thailand’s policymakers are likely to take a more cautious approach,” analysts at Goldman Sachs
said in a note.
They expect the Bank of Thailand (BoT) to hike its rate by 25 basis points (bps) – expected
widely as the central bank is seen moving gradually towards tightening considering nascent
recovery amid persistent inflation headwind.
Thailand, Southeast Asia’s second-largest economy and a net-oil importing nation, is
expected to grow 3.3% this year, according to the BoT’s outlook, compared with only 1.5% last
year. The inflation rate is seen peaking in the current quarter, averaging significantly above
its target range of 1% to 3%.
Barclays analysts expect July inflation – set to be released later this week – to be nearly
steady on a sequential basis driven by a drop in oil prices.
Meanwhile, data showed China’s factory activity logged slower growth in July just a month
after rebounding strongly, with persistent demand weakness and COVID-19 outbreaks.
Elsewhere in Southeast Asia, South Korea’s won weakened as much as 0.8%, marking
its worst day in over two weeks, while Indonesia’s rupiah and Taiwan’s dollar
slipped about 0.3% each.
Indonesia’s 10-year benchmark bond yield was trading at 7.104%, down 9.3 pips on
inflows following slight outlook improvement.
Later in the week, data is expected to show Southeast Asia’s largest economy grew 5.1% in
the second quarter, according to a Reuters poll, while analysts at Barclays expect 3.5% growth.
Meanwhile, inflation in July accelerated to a seven-year high, pressuring the central bank to
Among equities, shares in Singapore and Thailand advanced about 0.9% and
0.6%, respectively, while equities in the Philippines were down 1.1%.
** Indonesian 5-year yields fall 18.7 basis points to 6.438%
** HSBC H1 pretax profit falls 15%, increases profitability goal
** China’s Alibaba strives to keep New York listing amid audit dispute
at 0445 GMT
COUNTRY FX FX FX INDEX STOCKS STOCKS
RIC DAILY % YTD % DAILY % YTD %
Japan +0.51 -13.15 0.61 -4.5
China -0.17 -5.92 0.16 -10.48
India +0.11 -6.10 0.54 -0.60
Indonesia -0.32 -4.21 0.28 5.92
Malaysia -0.01 -6.40 0.32 -2.63
Philippines -0.14 -7.99 -1.05 -12.25
S.Korea -0.55 -9.01 0.08 -17.60
Singapore +0.07 -2.21 0.89 3.73
Taiwan -0.20 -7.74 -0.39 -17.99
Thailand +1.03 -7.95 0.68 -4.25
(Reporting by Sameer Manekar in Bengaluru; Editing by Christopher Cushing)