Wednesday, May 18

Asian currencies rise on less hawkish Fed, Thai baht and Indian rupee top gainers


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Asian currencies gained on Thursday, led

by the Thai baht and India’s rupee, as the US dollar weakened

after the Federal Reserve increased interest rates by a widely

expected 50 basis points and sounded less hawkish regarding

future hikes.

The rupee rose 0.4% against the dollar and was on

track for its sharpest gain in more than a month, after the

Reserve Bank of India hiked rates by 40 basis points on

Wednesday in an off-cycle move that caught investors off-guard.

The baht rallied 0.9% and was poised for its best

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session in nearly seven months, helped by risk-on sentiment

after the Fed decision.

Thailand reported a slower-than-expected rise in headline

inflation. The 4.65% print for April was below a Reuters poll

expectation of 4.98%. The core CPI index was up 2.0% from a year

earlier, in line with forecasts.

“The Bank of Thailand (BOT) will not be concerned as it was

expecting heightened inflation numbers. So, the BOT will

maintain policy rate at 0.5% to enable economic recovery and I

don’t expect a rate hike before the first half of 2023,” said

Poon Panichpibool, markets strategist at Krung Thai Bank.

The Malaysian ringgit rose 0.4%, while the Chinese

Yuan and Singapore’s dollar were largely flat.

Equities in the region were mixed as investors were relieved

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by the Fed’s less hawkish stance on rate hikes. Gains were led

by Indian stocks, which climbed 1.4% after a three-day

slide, and Philippine shares, which were up 1%.

“A 75 basis-point hike is the hawkish surprise that markets

were fearing, and hearing that it is ‘not something the

committee is actively considering’ has aided to ease some fears

of further ramp-up in tightening, at least for now,” Yeap Jun

Rong, market strategist at IG, said in a note.

While currencies performed well on Thursday, a Reuters poll

found that bearish bets on most Asian currencies surged on

worries over an economic slowdown in China and aggressive policy

tightening in the United States.

Investors also reversed bullish bets on the Indonesian

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rupiah for the first time since March, while the bearish

position on the Singapore dollar was at its peak since

July last year.

Markets in Japan, Indonesia and South Korea were closed for

public holidays.

HIGHLIGHTS:

** Philippine consumer price index rose 4.9% last month from

a year earlier, exceeding market forecasts

** Indonesia’s annual economic growth likely held steady in

Q1

** India says sudden halt to Russian oil imports would hurt

citizens

Asia stock indexes and currencies

at 0631 GMT

COUNTRY FX RIC FX FX INDE STOCKS STOCKS

DAILY % YTD % X DAILY YTD %

%

Japan -0.29 -11.0 <.n2>

China EC>

India +0.44 -2.30 <.ns ei>

Malaysia +0.35 -3.99 <.kl se>

Philippi +0.15 -2.52 <.ps nes i>

Singapore -0.15 -1.94 <.st e i>

Taiwan +0.19 -6.03 <.tw ii>

Thailand +0.88 -2.14 <.se ti>

(Reporting by Tejaswi Marthi in Bengaluru; Editing by

Subhranshu Sahu)

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