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Philippine peso, Thai baht firm on rate hike expectations

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The Philippine peso and Thailand’s

baht rose on Thursday after inflation data this week raised the

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probability of more interest rate rises by their central banks

to bring down soaring prices.

Other Southeast Asian currencies inched lower as global

recession worries and the prospect of aggressive interest rate

hikes by the U.S. Federal Reserve hurt risk sentiment.

The Singapore dollar, Malaysia’s ringgit,

China’s yuan and Taiwan dollar fell 0.1%

each.

The peso appreciated 0.3% and the baht gained

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0.4%.

Annual inflation in the archipelago, which accelerated to 8%

in November from a year earlier, strengthened the case for a 50

basis point (bps) hike by the Bangko Sentral ng Pilipinas (BSP)

at its upcoming Dec. 15 meeting.

On Wednesday, data showed Thailand’s headline CPI rose by

5.55% in November from a year earlier, marking its slowest pace

in seven months although the pace far exceeds the central bank’s

target range of 1% to 3%.

The Bank of Thailand (BoT) has raised rates by a total of 75

bps since August, including the latest 25 bp hike in

late-November.

“We continue to expect the BoT to continue hiking policy

rates in 25bp increments until the policy rate reaches a

terminal rate of 2.5% in Q3 next year,” analysts at Goldman

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Sachs said in a note.

The dollar index, which measures the greenback versus

six peers, was up 0.1% to 105.27, adding pressure on regional

currencies.

Investors are keenly awaiting inflation data from the U.S.

and the policy-setting Federal Open Market Committee where a

half-percentage point hike is expected, with just 9% odds for

another 75 bps increase.

The two-day meeting will begin on Dec. 13.

Meanwhile, China on Wednesday announced the most sweeping

changes to its resolute anti-COVID regime, such as allowing

infected people with mild symptoms to quarantine at home.

However, China’s easing of COVID curbs did not significantly

impact emerging Asia.

“Such refinements might have been priced in by the market

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and we continue to watch death counts or any reports that

healthcare capacity could come under strain in this re-opening

wave,” analysts at Maybank wrote in a note.

Equities across emerging Asia were mixed, with Indonesia’s

benchmark index declining 1.4% and stocks in Singapore

advancing 0.3%. Equities in Bangkok and Kuala

Lumpur fell 0.4% and 0.2%, respectively.

The Philippine stock market was closed for a public holiday.

HIGHLIGHTS:

** China health officials to hold press conference on COVID

measures

** Japan upgrades Q3 GDP as global recession, COVID risks

linger

The following table shows rates for Asian currencies against

the dollar at 0352 GMT.

COUNTRY FX RIC FX FX INDE STOCKS STOCKS

DAILY % YTD % X DAILY YTD %

%

Japan -0.15 -15.8 <.n2>

China EC>

India +0.16 -9.72 <.ns ei>

Indonesi +0.10 -8.77 <.jk a se>

Malaysia -0.14 -5.39 <.kl se>

Philippi +0.34 -7.79 <.ps nes i>

S.Korea 11>

Singapor -0.13 -0.58 <.st e i>

Taiwan -0.08 -9.76 <.tw ii>

Thailand +0.37 -4.02 <.se ti>

(Reporting by Upasana Singh in Bengaluru; Editing by Jacqueline

Wong)

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