Tuesday, February 27

Asian FX set for weekly losses on economy woes; rupiah at 2-year low


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Most Asian currencies slide on Friday and

were set for weekly losses as data pointing towards an economic

slowdown amped up selling, with Indonesia’s rupiah touching a

two-year low.

A slew of US data in the past week included a

weaker-than-expected growth in May consumer spending and

inflation-adjusted consumer spending that saw a contraction.

“In general, growing concerns over US and global growth is

keeping pressure on Asian currencies,” said Alvin Tan, head of

Asia FX strategy at RBC Capital Markets.

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A strong dollar also served as an additional headwind to

Asian units, gaining 0.6% this week.

Thailand’s baht was the biggest decliner, losing

0.7% and was set for a 0.2% drop for the week.

The Indian rupee, with its 1% weekly loss so far,

is set to be the region’s largest decliner for the week. The

currency traded 0.2% lower and hit a fresh record low of 79.115

to the dollar on Friday.

The country — battling high inflation from soaring commodity

prices — imposed export duties for some petroleum products while

introducing a windfall tax and an obligation on oil exporters to

sell to the domestic market the equivalent of 50% of what they

sold to overseas customers.

However, the move is expected to have only a limited impact

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on inflation and serve more as a revenue source for the

government in the short term, said Gaurang Somaiya, an analyst

at Motilal Oswal. The rupee still shed 0.2%.

Earlier this year, Indonesia also briefly halted exports of

palm oil and imposed domestic market obligations on suppliers in

a bid to cool consumer price rise.

The country reported higher-than-expected annual inflation,

but core inflation, which excludes some government-controlled

and volatile prices, came in below market expectations.

The central bank governor said since core inflation looked

relatively low, Bank Indonesia (BI) would not rush to hike

rates. The rupiah was down 0.3%.

“We believe the central bank will hike rates as early as

August, although BI’s hike path will not likely be as aggressive

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as others in the region,” said analysts at ING.

Indonesia also slashed its fiscal deficit outlook for the

year as it expected to benefit from its position as a commodity

exporter.

Despite broader market weakness, South Korea’s won

logged a 0.1% gain, which RBC’s Tan attributed to

strength in the Japanese yen, as the two currencies tend

to be correlated, to some extent, because they export similar

goods.

Weak US data also pushed down the country’s yields

and Asian yields mirrored the moves.

Singapore’s 10-year benchmark yield dropped 6.5

basis points to 2.898%, while Indonesia’s was down

0.5 basis points at 7.244%.

Most Asian stock markets were in losses, with Indonesian

stocks plummeting 1.7% and Indian stocks sliding

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0.9%. Malaysian and Thai stocks, however,

managed to rise 0.5% and 0.3% respectively.

HIGHLIGHTS:

** Taiwanese stock index slides 3.3%, its worst

session since May 2021, deputy finance minister calls for

investor calm and says country’s economic fundamentals are good

** New Philippines central bank governor Felipe Medalla

takes office on Friday

Asia stock indexes and currencies at

0719 GMT

COUNTRY FX RIC FX FX INDE STOCKS STOCKS

DAILY % YTD % X DAILY YTD %

%

Japan +0.53 -14.7 <.n2>

China EC>

India -0.16 -6.03 <.ns ei>

Indonesi -0.34 -4.66 <.jk a se>

Malaysia -0.05 -5.54 <.kl se>

Philippi -0.24 -7.53 <.ps nes i>

S.Korea 11>

Singapore -0.27 -3.19 <.st e i>

Taiwan -0.15 -6.99 <.tw ii>

Thailand -0.70 -6.08 <.se ti>

(Reporting by Harshita Swaminathan; editing by Uttaresh.V)

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