Most emerging Asian currencies traded
narrowly on Tuesday, with the Indonesian rupiah hitting a
one-week low as investors wait to see if the Federal Reserve
will slow the pace of rate hikes as inflation and the economy
show signs of losing momentum.
The rupiah fell 0.2% and Malaysia’s ringgit
eased 0.1%, while Thailand’s baht was flat.
“The market is generally cautious ahead of the major macro
events, namely the Federal Open Market Committee meeting, the
European Central Bank meeting and the U.S. payrolls data,” said
Alvin Tan, head of Asia FX strategy at RBC Capital Markets.
The Fed is widely-expected to raise interest rates by 25
basis points (bps) on Wednesday – the smallest since the central
bank kicked off its tightening cycle 10 months ago with one the
same size. Analysts expect two more quarter-percentage point
hikes by mid-2023.
“I expect the Fed to reiterate the message that it is not
looking to cut rates this year, contrary to market expectations.
Nonetheless, the market is warming up to the idea that the Fed
will pause soon,” said Tan, adding that risk sentiment is likely
to stay supported in coming weeks.
The Philippine peso was flat, while stocks in Manila
slumped 2.8% and were set to mark their worst day since
Dec. 2 last year.
Inflation in the archipelago was likely to be within a range
of 7.5% to 8.3% in January after it hit a 14-year high in
India’s rupee fell 0.2%. Stocks in Mumbai
advanced 0.1%, with investors keeping an eye on the final day of
Adani Enterprises’ mega secondary share sale and the federal
budget scheduled for Wednesday.
In other news, data showed China’s economic activity swung
back to growth in January after a wave of COVID-19 infections
passed through the country faster than expected following
Beijing’s sudden U-turn on pandemic controls.
Equities across Southeast Asia were on the back foot, with
stocks in Kuala Lumpur declining 0.8% and Thailand’s
benchmark index shedding 0.3%.
Stocks in Jakarta fell 0.6%. South Korea’s benchmark
index, which has gained 9% this month, dipped 0.6%.
** China’s troubled property sector will continue to weigh
on growth and will not be an engine of growth until there is
some “cleaning up” of the market, according to the International
Monetary Fund’s chief economist
** Japanese makers of semiconductor manufacturing machinery
and materials used to make chips said on Monday they had yet to
hear from Japan’s government about export restrictions
The following table shows rates for Asian currencies against
the dollar at 0402 GMT.
COUNTRY FX RIC FX FX INDE STOCKS STOCKS
DAILY % YTD % X DAILY YTD %
Japan +0.19 +0.71 <.n2>
India -0.16 +1.34 <.ns ei>
Indonesi -0.18 +3.82 <.jk a se>
Malaysia -0.07 +3.65 <.kl se>
Philippi +0.04 +2.13 <.ps nes i>
Singapor +0.02 +1.97 <.st e i>
Taiwan +0.29 +2.19 <.tw ii>
Thailand +0.00 +5.59 <.se ti>
(Reporting by Upasana Singh in Bengaluru; Editing by Jacqueline