Currencies

Most Asian currencies shackled by firmer dollar, Fed outlook -February 06, 2024 at 12:14 am EST

* Most Asian currencies flat, equities up
* Malaysian ringgit hovering near 3-month low
* Thailand interest rate decision eyed

By John Biju
       Feb 6 (Reuters) - Most Asian currencies hardly budged on
Tuesday as the U.S. dollar firmed close to a three-month peak
helped by markets paring back expectations of near-term interest
rate cuts from the Federal Reserve.  
    The Malaysian ringgit retreated 0.3%, and hovered
near a three-month low it hit on Monday. The Indonesian rupiah
 edged 0.2% lower. 
    A string of robust U.S. economic data, including the bumper
payrolls report from last week, and hawkish comments from Fed
policymakers have prompted investors to reassess their rate-cut
expectations for the year.
    Traders are pricing in a 15% chance of a Fed rate cut in
March, down from 46% a week ago, and see a 62% probability of a
cut by May, according to the CME Group's FedWatch Tool. 
    "Most Asian central banks are likely to wait for the Fed to
begin cutting rates before moving themselves," said Alvin Tan,
head of Asia FX strategy at RBC Capital Markets. 
    "The key exceptions are the PBOC, which is already been
easing, and possibly the Bank of Thailand due to the
government's pressure to support the economy," he added. 
    The Bank of Thailand is due to announce its policy decision
on Wednesday, when it is expected to keep its key interest rate
unchanged, and leave it there until early 2025, according to a
Reuters poll. 
    Data on Monday showed Thai inflation slowed for a fourth
straight month in January. That prompted Thailand's Prime
Minister Srettha Thavisin to again call on the central bank to
cut interest rates, saying a 25 basis-point rate cut would help
people and not stoke inflation.    
    The Thai baht was last marginally up. 
    Data in the Philippines showed annual inflation increased at
its slowest pace in over three years. 
    However, the Bangko Sentral ng Pilipinas (BSP), which is set
to meet on Feb. 15, reinforced its hawkish stance saying that
monetary policy would have to stay 'sufficiently tight' until a
sustained downward trend in inflation becomes evident.
    "If we continue to see inflation moderate well into 2Q, we
do expect BSP to begin to change their tune to signal a pivot,
possibly by June," ING analyst wrote.
    Most stocks in the region inched higher tracking a bounce in
battered Chinese markets, after recent signs of support from
state-backed investors and as authorities have stepped in to
stem heavy losses in the market.
    Shanghai stocks added 0.8%. Equities in Thailand
, Indonesia and India advanced between
0.3% and 0.8%.
    
        
    HIGHLIGHTS:    
    ** Reserve Bank of India rate decision, China inflation data
due this week
    ** BOJ on track  for policy shift by April, helped by wage
outlook
    ** India's January services growth at six-month high on
robust demand -PMI
    
  Asia stock indexes and currencies                       
 at 0422 GMT                                        
 COUNTRY   FX RIC          FX     FX  INDE  STOCKS  STOCKS
                      DAILY %  YTD %     X   DAILY   YTD %
                                                 %  
 Japan                  +0.08  -5.04  <.N2  -0.51    8.08
                                      25>           
 China                               EC>           
 India                  +0.03  +0.21  <.NS    0.26    0.45
                                      EI>           
 Indonesi               -0.22  -2.16  <.JK    0.43   -0.59
 a                                    SE>           
 Malaysia               -0.25  -3.57  <.KL    0.08    3.98
                                      SE>           
 Philippi               +0.04  -1.62  <.PS    0.22    4.55
 nes                                  I>            
 S.Korea                             11>           
 Singapor               +0.10  -1.98  <.ST   -0.13   -3.40
 e                                    I>            
 Taiwan                 +0.08  -1.96  <.TW       -    0.92
                                      II>           
 Thailand               +0.08  -4.38  <.SE    0.75   -1.52
                                      TI>           
 

    
 (Reporting by John Biju in Bengaluru
Editing by Shri Navaratnam)
  

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