Asian currencies were mixed on
Friday, with the Singapore dollar leading the upside, as
continued interest rate hikes by major central banks globally
and a steadfast hawkish stance fueled global recession worries
and kept risk appetite in check.
The U.S. Federal Reserve hiked interest rates by a widely
expected 50 basis points (bps) on Wednesday, and the Bank of
England and the European Central Bank followed suit and
maintained their hawkish stance to tame soaring inflation.
Analysts at ANZ research, however, highlighted 2023 as a
favorable year for Asian currencies and fixed income on
expectations that inflation will ease, with a majority of
central banks seen likely to pause their tightening cycle as
early as the first quarter.
In Southeast Asia, the Singapore dollar strengthened
0.4% by 0258 GMT, while the Philippine peso and
Thailand’s baht firmed 0.2% and 0.1%, respectively.
Singapore’s non-oil domestic exports missed analysts’
estimates and fell sharply in November, marking a decline for a
second consecutive month.
However, analysts at Barclays say core inflation likely
edged down in November as sequential momentum continued to cool
gradually, adding that headline inflation may show a slightly
lower reading next week.
Meanwhile, the Philippine central bank said it backed the
creation of a sovereign wealth fund being pushed by President
Ferdinand Marcos Jr, despite having earlier raised concerns
about transparency over its governance.
Bangko Sentral ng Pilipinas Governor Felipe Medalla said the
likelihood the central bank will not increase its policy rates
at upcoming meetings was “extremely low” as it looks to ensure
inflation ran within its 2-4% target range next year.
Among other currencies, the Malaysian ringgit and
Indonesian rupiah weakened 0.1% while the Indian rupee
largely traded flat.
Indonesia, Southeast Asia’s largest economy, booked a
larger-than-expected trade surplus last month as imports
unexpectedly contracted alongside slowing exports, according to
Analysts at Barclays expect Bank Indonesia to hike policy
rates by a modest 25 bps when it meets next week.
“Another back-to-back policy rate hike is likely – our base
case is for 25bp – but we note that this is a close call, with a
significant risk of another 50bp move,” they added.
Thailand’s central bank chief said that while its economy
continues to recover it still faces challenges, adding the bank
is ready to adjust the pace of interest rate hikes if necessary.
Equities in Southeast Asia were largely trading lower with
those in Kuala Lumpur and Bangkok retreating
0.1% while those in Manila and Jakarta shedding
0.6% and 0.4%, respectively.
** Indonesian 10-year benchmark yields rise 7.1 basis points
** Taiwan central bank raises benchmark interest rate to
** J.P.Morgan raises China’s 2023 growth forecast to 4.3%
Asia stock indexes and currencies
at 0401 GMT
COUNTRY FX RIC FX FX INDEX STOCKS STOCKS
DAILY % YTD % DAILY YTD %
Japan +0.31 -16.2 -1.66 -5.86
India -0.08 -10.2 -0.44 5.65
Indonesi -0.08 -8.81 -0.23 2.35
Malaysia -0.16 -5.83 -0.17 -4.74
Philippi +0.16 -8.51 -0.62 -8.37
Singapor +0.35 -0.52 -0.63 4.14
Taiwan -0.40 -9.99 -1.24 -20.13
Thailand +0.09 -4.68 -0.05 -2.30
(Reporting by Roushni Nair in Bengaluru; Editing by Lincoln
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