EMERGING MARKETS-Most Asian currencies rise amid muted dollar, investors eye Fed minutes

By Savyata Mishra

Jan 3 (Reuters)Most currencies in Asian emerging markets began the new year on the front foot, helped by a subdued US dollar, with Thailand’s baht gaining the most on Tuesday, although sentiments were guarded ahead of minutes of Federal Reserve’s policy meeting and surging COVID-19 infections in China.

The baht THB=TH rose up to 0.7% to its highest point since early June, extending gains into the third straight session as the tourism-reliant nation banked on the hopes of China’s reopening after Beijing’s abrupt U-turn in COVID policy in early December.

The greenback index=USD was down 0.1%, amid a recent weakening in the currency as markets bet that a Federal Reserve tightening cycle may be nearing an end. The index rose 8% last year in its biggest annual jump since 2015.

Further anchoring gains in the region was the yuan’s CNY=CFXS 0.3% rise. The currency hit a more than four-month high against the dollar, underpinned by investor optimism that domestic economic recovery could set in earlier than expected.

A private sector survey showed China’s factory activity shrank faster in December as COVID infections disrupted production and weighed on demand.

In coming days, traders will closely watch the rapid pace of reopening in China, which Bank of America analysts predict “may indicate a deeper and more disruptive shock in the near term, before a robust rebound”.

Investor focus will also be on domestic markets after a slew of economic data during the week, along with the minutes of the Federal Reserve’s December policy meeting, which may hold clues to what rate path is likely for 2023.

Meanwhile, Singapore’s dollar SGD= rose 0.3% while its stocks .STI fell 0.6% after data showed the city-state’s economy grew faster than official forecasts in 2022, but fourth quarter activity slowed, reflecting risks from inflation and global demand weakness.

OCBC analysts see Singapore’s growth momentum moderating in 2023 as its manufacturing sector remains lackluster in the near-term.

Indonesia’s rupiah IDR= dipped 0.1% after its December inflation print showed a slight jump on Monday.

The Japanese yen JPY= jumped to its strongest in six months, up 0.9%, amid speculation that the Bank of Japan might move away from its ultra-easy policy.

Most regional equities were higher amid broader market moves with Jakarta stocks .JKSE leading with a 0.6% gain. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged up 0.5% following choppy early trade.

Malaysian stocks .KLSE dropped 1.2%, snapping a six-day winning streak.

HIGHLIGHTS:

** China’s yuan hit a more than four-month high against the dollar on the first trading day of the year

** The Bank of Singapore on Tuesday appointed Jason Moo, formerly of wealth manager Julius Baer, ​​as its new chief executive from March 6

** The Indian rupee was little changed to the US currency on Tuesday, tracking a muted dollar, as markets awaited a host of data from the world’s top economy to find direction this week

Asia stock indexes and currencies at 0220 GMT

COUNTRY

FX RIC

FX DAILY %

FX YTD %

INDEX

STOCKS DAILY %

STOCKS YTD %

Japan

JPY=

+0.69

+0.99

.N225

China

CNY=CFXS

+0.17

+0.17

.SSEC

0.71

0.71

India

INR=IN

-0.03

-0.05

.NSEI

0.15

0.66

Indonesia

IDR=

-0.10

-0.13

.JKSE

0.56

0.56

Malaysia

MYR=

+0.30

+0.30

.KLSE

-1.21

-1.21

Philippines

PHP=

-0.04

-0.09

.PSI

0.75

0.75

S.Korea

KRW=KFTC

-0.02

-0.65

.KS11

-0.10

-0.58

Singapore

SGD=

+0.22

+0.11

.STI

-0.53

-0.53

Taiwan

TWD=TP

+0.03

+0.03

.TWII

0.60

0.60

Thailand

THB=TH

+0.65

+0.65

.SETI

0.45

0.45

Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

Asian stock marketshttps://tmsnrt.rs/2zpUAr4

(Reporting by Savyata Mishra in Bengaluru)

((Savyata.Mishra@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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