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Asian currencies, stocks weaken on doubts over when Fed will slow rate rises

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Most Asian emerging currencies and

stock markets took a beating on Tuesday as strong U.S. services

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data supported the dollar by raising doubts over how soon the

Federal Reserve would begin to opt for smaller hikes in interest

rates.

Uncertainty over the Fed’s intentions overshadowed optimism

about China beginning to relax its zero-COVID strategy.

South Korea’s won and Malaysia’s ringgit

depreciated 1.3% and 0.3%, respectively. Indonesia’s rupiah

fell 0.6%.

The U.S. dollar index, which measures the currency

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against six major peers, changed hands at 105.11 in early Asian

trading, easing 0.1% after Monday’s 0.7% rally, its biggest

since Nov. 21.

“The major factor for the market would be growing concerns

over Fed’s rate hikes which has led to some profits-taking on

risky assets and rally in the U.S. dollar,” said Poon

Panichpibool, Markets Strategist at Krung Thai Bank.

Panichpibool said Asian currencies could outperform the

dollar next year, as the greenback peaks.

Thailand’s baht dropped 0.7%, while equities in

Bangkok shed 0.1%.

“The reason that the Thai baht has weakened today could come

from some hedging position which may have turn(ed) after the

U.S. data was better than expected yesterday,” said Kittika

Boonsrang, capital markets business research specialist at

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Kasikornbank.

Meanwhile, Philippine annual inflation surged to a 14-year

high in November driven mainly by higher food prices, thereby

supporting the case for a half-percentage point interest rate

hike this month.

The country’s central bank has raised rates six times this

year to meet its inflation target of 2%-4% for the year. Last

week, its governor flagged another 25 basis points or 50 basis

points hike at the Dec. 15 meeting.

The peso depreciated 0.1%, while stocks in Manila

gained 1.5%.

Bucking the broader trend, Singapore’s dollar

appreciated 0.2% to be the only bright spot among Asian emerging

currencies.

Stocks in Asia also remained on the backfoot, with

Indonesia’s benchmark index retreating 1.1% and leading

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losses in the region.

HIGHLIGHTS:

** China may announce 10 new COVID easing steps on Weds

-sources

** New PM Anwar says Malaysia to review plans for 5G network

** Sanurhasta Mitra and Citra Tubindo

lead laggards on Indonesia’s benchmark index

The following table shows rates for Asian currencies against

the dollar at 0339 GMT.

Asia stock indexes and currencies at

0338 GMT

COUNTRY FX RIC FX FX INDE STOCKS STOCKS

DAILY % YTD % X DAILY YTD %

%

Japan -0.10 -15.9 <.n2>

China EC>

India -0.38 -9.46 <.ns ei>

Indonesi -0.62 -8.42 <.jk a se>

Malaysia -0.25 -4.87 <.kl se>

Philippi -0.11 -8.96 <.ps nes i>

S.Korea 11>

Singapor +0.24 -0.43 <.st e i>

Taiwan -0.29 -9.34 <.tw ii>

Thailand -0.71 -4.59 <.se ti>

(Reporting by Upasana Singh in Bengaluru; Editing by Simon

Cameron-Moore)

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