Currencies

Asian currencies, stocks subdued; all eyes on US inflation data -January 10, 2024 at 01:02 am EST

* Philippine peso hits more than 2-mth low
* S. Korean won hits lowest since Dec. 7
* BOK base rate, U.S. Dec inflation due on Thursday
* Thai PM set to meet cenbank governor

By Echha Jain
       Jan 10 (Reuters) - The Philippine peso fell most among
emerging Asian currencies against the greenback on Wednesday,
while equities were also under pressure ahead of crucial U.S.
inflation data that will likely offer more clarity on the timing
of rate cuts. 
    The peso depreciated as much as 0.5% against the U.S.
dollar to hit its lowest level since Nov. 3. Data showed the
country's trade balance in November remained in substantial
deficit. 
    The Indonesian rupiah fell as much as 0.4% to its
lowest in nearly a month.
    Among equities, Singapore stocks retreated as much as
1.1%. They were followed by equities in Manila, which
slipped as much as 0.8%.
    Traders are awaiting U.S. inflation data, due on Thursday,
to assess the timing and size of any Federal Reserve interest
rate cuts in 2024.
    "A softer (inflation) print should see goldilocks trade
returning while USD and UST yields can ease off. This should
help weigh on USD/AxJs," said Christopher Wong, an FX strategist
at OCBC.
    Higher inflation is not ruled out, Wong added, which should
see further unwinding of aggressive Fed cut bets. 
    Expectations that the Fed could be cutting rates as soon as
March have been slowly decreasing. Markets are currently pricing
in a nearly 68% chance that the Fed could begin easing rates as
early as March, the CME FedWatch Tool showed. 
    Back in Asia, the won slipped as much as 0.5% to
its lowest level since Dec. 7, 2023. Stocks in Seoul
declined for a sixth straight session, losing as much as 0.8% to
hit their lowest level since Dec. 14, 2023. 
    The Bank of Korea (BOK) is set to announce its key base rate
on Thursday. Economists are expecting the BOK to keep the key
policy unchanged until at least Q3 despite some concerns around
financial stability, a Reuters poll found. 
    "While we do not expect BOK to cut rates just yet as
inflation pressures remain, a shift towards a neutral stance may
imply consolidation for USD/KRW in the short-term," analysts at
DBS wrote. 
    Jeff Ng, head of Asia macro strategy at Sumitomo Mitsui
Banking Corp, said he sees most central banks in the region
standing pat as well, likely in line with the BOK, and think
about rate cuts later in the year. 
    Hence, there would be limited impact on the emerging Asian
currencies for now, he said.
    The Thai baht slipped 0.4% while equities in
Bangkok were flat ahead of a meeting between the
country's Prime Minister Srettha Thavisin and its central bank
governor later in the day to discuss a stimulus plan and other
matters.
    This comes after Srettha, who is also finance minister,
urged the central bank earlier this week to consider cutting
interest rates to help the economy, with inflation at very low
levels.    
    Meanwhile, the Taiwanese dollar and stocks in
Taipei slipped 0.2% each. Taiwan goes to the polls on
Saturday to elect a new president and parliament.

    
    HIGHLIGHTS:    
    ** Thai corporate bond issuance seen up to $28.5 bln this
year
    ** Japanese shares hit near 34-year high on tech gain,
weaker yen
        
  Asia stock indexes and                              
 currencies at 0447 GMT                          
 COUNTRY  FX RIC        FX     FX  INDE  STOCKS  STOCK
                     DAILY  YTD %     X   DAILY  S YTD
                         %                    %      %
 Japan               -0.21  -2.56  <.N2   2.11   3.02
                                   25>           
 China                           EC>           
 India               -0.06  +0.05  <.NS   -0.09  -0.95
                                   EI>           
 Indones             -0.29  -1.06  <.JK    0.72  -0.29
 ia                                SE>           
 Malaysi             -0.11  -1.23  <.KL   -0.67   2.34
 a                                 SE>           
 Philipp             -0.37  -1.51  <.PS   -0.72   1.87
 ines                              I>            
 S.Korea                         11>           
 Singapo             -0.04  -0.91  <.ST   -1.00  -2.29
 re                                I>            
 Taiwan              -0.24  -1.17  <.TW   -0.24  -2.44
                                   II>           
 Thailan             -0.34  -2.44  <.SE    0.04  -0.02
 d                                 TI>           
 

    
 (Reporting by Echha Jain in Bengaluru; Editing by Muralikumar
Anantharaman)
  

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