Saturday, August 13

Asian currencies edge up on soft dollar as Fed outcome looms


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Asian currencies edged up against a

slightly softer US dollar on Tuesday, with the South Korean

won ticking up after robust second-quarter economic data, but

caution persisted as markets braced for a steep rate hike from

the US Federal Reserve.

The Philippine peso and the Thai baht

strengthened 0.1% and 0.2%, respectively, while the Malaysian

ringgit dipped 0.1%.

The won rose 0.3% after data showed South Korea’s

economic growth unexpectedly picked up in the second quarter, as

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consumption rebounded after COVID-19 curbs eased. That supported

the case for more rate hikes by the central bank.

The Bank of Korea estimated that gross domestic product for

the April-June period had been 0.7% higher than in the previous

quarter. The GDP grew faster than the 0.4% rise tipped in a

Reuters survey and the 0.6% recorded for the first quarter.

Stocks rose 0.4%.

ANZ economist Krystal Tan, however, warned that growth

momentum would be difficult to sustain, as “weak export

prospects, high domestic inflation and rising interest rates all

point to intensifying headwinds.”

Investors in the region now await a likely 75 basis point

rate increase from the Fed this week, with markets pricing in a

chance of about 10% for a larger hike.

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“The wait-and-see sentiments in the lead-up to the Fed

meeting this week may drive some paring down of risk positions,”

said Yeap Jun Rong, market strategist at IG in Singapore.

Stocks in Kuala Lumpur, Mumbai, and Bangkok

declined between 0.2% and 0.8%.

Stocks in Shanghai, however, rebounded as real

estate developers continued to rise on news that Beijing was

planning to set up a fund to aid the troubled industry. But

lingering concerns over elevated domestic COVID-19 cases weighed

on the yuan, which traded flat.

Markets are also eyeing preliminary data for Taiwan’s GDP.

Economists estimate it expanded at a slightly slower pace in the

second quarter, hit by COVID-19 lockdowns in top export market

China and a surge in domestic infections.

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Taiwanese stocks were down 0.9%, a day after China

delivered sterner warnings to US officials about House Speaker

Nancy Pelosi’s possible visit to Taiwan.

On Monday, official data showed that Singapore’s key

consumer price gauge had risen at its fastest pace in more than

13 years, increasing pressure on the central bank to consider

further policy tightening.

Singapore’s dollar was up 0.1%, and stocks

rose 0.3%.

In Thailand, the finance ministry maintained its 2022

economic growth forecast at 3.5%, underpinned by improved

tourism and exports.

Shares in Thai Life Insurance Plc (TLI), which has

Southeast Asia’s largest initial public offering so conducted

far this year, were down 3.1%.

HIGHLIGHTS

** Malaysia warns of weaker Q3 palm oil price as Indonesia

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scraps export levy

** Philippines’ Marcos lays out ambitious policy agenda with

farm sector in focus

** Indonesia c.bank says to ensure QE-era bond sales do not

disrupt market

** Singapore industrial production for June up 2.2%

year-on-year

Asia stock indexes and currencies at 0602 GMT

COUNTRY FX RIC FX FX FX YTD INDEX STOCK STOCKS

DAILY % S YTD %

% DAILY

%

Japan -0.01 -15.80 -0.23 -4.01

China -0.03 -5.91 0.59 -10.17

India -0.06 -6.83 -0.77 -4.91

Indonesia +0.00 -4.97 0.28 4.50

Malaysia -0.09 -6.53 -0.48 -6.72

Philippines +0.14 -8.46 0.17 -12.67

S.Korea +0.32 -9.22 0.42 -18.93

Singapore +0.07 -2.61 0.26 2.08

Taiwan -0.04 -7.45 -0.87 -18.73

Thailand +0.18 -8.82 -0.22 -6.07

(Reporting by Harish Sridharan in Bengaluru; editing by

Uttaresh.V)

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