Asian stocks and currencies weighed by global recession woes

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Asian currencies were mixed on

Friday, with the Singapore dollar leading the upside, as

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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.

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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

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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

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unexpectedly contracted alongside slowing exports, according to

official data.

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.

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HIGHLIGHTS:

** Indonesian 10-year benchmark yields rise 7.1 basis points

to 6.930%

** Taiwan central bank raises benchmark interest rate to

1.75%

** 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

1

China

India -0.08 -10.2 -0.44 5.65

5

Indonesi -0.08 -8.81 -0.23 2.35

a

Malaysia -0.16 -5.83 -0.17 -4.74

Philippi +0.16 -8.51 -0.62 -8.37

nes

S.Korea

Singapor +0.35 -0.52 -0.63 4.14

e

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

Feast.)