Thursday, December 8

Asian currencies decline against buoyant dollar; Thai baht slumps over 1%


Article content

Most emerging Asian currencies

weakened against a stronger US dollar on Thursday, with

Article content

Thailand’s baht shedding more than 1% following a quarter-point

rate hike that investors viewed as moderate to bring down

inflation running at a 14-year high.

Thailand’s central bank chief said the bank was ready to

adjust the pace of tightening monetary policy if needed and

would be prepared to hold an off-cycle meeting if necessary.

The comments came a day after the Bank of Thailand (BOT)

Advertisement 2

Article content

hiked its key interest rate by 25 basis points (bps) to tame

Inflation running far above its target range of 1% to 3%.

“We continue to expect gradual BOT tightening over the

coming months,” said Chua Han Teng, a DBS Research Group

fellow.

“Still above-target inflation warrants additional interest

rate increases, but an economic recovery that has lagged peers

and is facing threats from a global slowdown cautions against

aggressive hikes.”

The baht led losses in the region, hovering near

Wednesday’s low of 38.45 per dollar – a level unseen in more

than 16 years. The currency has lost about 12.7% so far this

year.

Meanwhile, the US dollar’s rally on the back of an ever

more hawkish Federal Reserve weighed on emerging Asian

Advertisement 3

Article content

currencies, with Indonesia, South Korea, Taiwan and China

stepping forward to stabilize their financial markets.

Stabilization efforts from policymakers around the world,

including the Bank of England’s (BoE) recent move, can help

restore market confidence and provide a temporary breather to

risk assets, said Christopher Wong, FX strategist at OCBC.

The BoE said on Wednesday it would buy as much as 5 billion

pounds ($5.40 billion) a day of long-dated government bonds

until Oct. 14. The announcement came after unfunded tax cuts

announced in Britain last week triggered a financial chaos

globally.

“The strong USD trend still needs to dissipate for currency

markets to take a more meaningful breather,” said Wong.

Advertisement 4

Article content

The dollar index, which measures the greenback

against a basket of six currencies, rose 0.5% to 113.59. It had

touched a 20-year high of 114.78 on Wednesday.

The Malaysian ringgit and the Philippine peso

fell 0.3% and 0.4%, respectively, while the Singapore dollar

weakened 0.5%. India’s rupee eased 0.1%.

The rupiah firmed 0.1% after hitting its lowest since

April 2020 on Wednesday. South Korea’s won and the

Taiwan dollar rose 0.1% each.

Equities in Southeast Asia were broadly higher, with Jakarta

and Shanghai the only markets trading in

negative territory.

Singapore and Bangkok led gains in the

region, rising 1.1% each. Equities in the Philippines and

India climbed 0.8% and 0.5%, respectively.

HIGHLIGHTS:

Advertisement 5

Article content

** RBI to raise rates again, slim majority of economists

expect 50-bp hike – Reuters poll

** Indonesia president sees Q3 GDP growth at 5.4%-6%

** India forex reserves set to shrink further, stir memories

of 2008 crisis – Reuters poll

The following table shows rates for Asian currencies against

the dollar at 0615 GMT.

COUNTRY FX RIC FX FX INDE STOCKS STOCKS

DAILY % YTD % X DAILY YTD %

%

Japan -0.35 -20.4 <.n2>

China 1 EC>

India +0.11 -9.19 <.ns ei>

Indonesi +0.07 -6.56 <.jk a se>

Malaysia -0.34 -10.3 <.kl se>

Philippi -0.36 -13.5 <.ps nes i>

S.Korea 6 11>

Singapore -0.53 -6.44 <.st e i>

Taiwan +0.10 -13.0 <.tw ii>

Thailand -1.41 -12.7 <.se ti>

(Reporting by Upasana Singh in Bengaluru; Editing by Subhranshu

Sahu)

Advertisement

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.



financialpost.com