Currencies

South Korean won, Philippines peso lead losses among subdued Asian currencies

BENGALURU (Aug 10): Most Asian currencies were subdued on Wednesday, while most stock markets in the region fell, tracking losses on Wall Street, as investors awaited US inflation data later in the global day.

The South Korean won, which fell 0.3%, and the Philippines peso, down 0.2%, led the laggards for the day, while the Singapore dollar and the Malaysian ringgit were nearly flat.

Investors are watching for any signs that red-hot US inflation eased in July despite last week’s unexpectedly strong US jobs numbers, but even the slight pullback being forecast is unlikely to alter expectations of more sharp interest rate rises ahead.

The dollar index, which measures the strength of the greenback against six major currencies, edged slightly lower to 106.29 in Asian trade.  

“Markets now are likely re-adjusting to the prospects that the end of the Fed hike cycle could be further out in terms of timing and terminal rates could be higher,” analysts from DBS said in a research note.

Back in the region, the Thai baht edged higher in early trade as the tourism-reliant Southeast Asian nation awaits its central bank’s policy decision later in the day. It is expected to lift its key rate by 25 basis points, making it one of the last countries in the region to raise rates.

“On net though, BOT’s gradual hike trajectory in the second half could have been priced in by markets somewhat, and more uncertainty could come from the Fed policy path instead,” analysts from Maybank wrote.

The Philippine peso extended losses for the second straight day after second-quarter economic growth came in slower than expected, though the government is confident this year’s growth target remains achievable.

Meanwhile, the Chinese yuan edged lower after its July inflation numbers missed forecasts, pointing to slower economic growth.

Most stock markets in the region fell, with Indonesia dropping as much as 1.1%, while Philippines fell 0.8% and South Korea’s KOSPI lost 0.6%.

Shares in Malaysia fell about 0.3% ahead of its second-quarter GDP on Friday, although a Reuters poll found that its economy likely grew at the fastest rate in year due to strong rebounds in exports and consumption.

Highlights:

  • Indonesia central bank governor says authorities should shore up food supplies to ensure lower prices
  • India bond yields seen higher on hawkish rate hike view
  • Indonesia 10-year bond yield up to 7.120%

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