Sunday, July 3

Asian stocks fall; Thai baht dips as key rates likely to be on hold


Article content

Asian currencies were mixed and stocks

slid on Monday, as markets looked to US inflation data later

this week, while the Thai baht fell ahead of a central bank

meeting where it is likely refrain from changing key interest

rates.

A Reuters poll of economists found that the Bank of Thailand

(BoT) is expected to leave rates unchanged when they meet on

Wednesday, despite red-hot inflation that has accelerated at a

faster-than-expected pace in May.

The poll also showed that the central bank will leave

Advertisement 2

Article content

interest rates unchanged at record lows for the rest of the year

to support economic recovery despite the consumer price index

rising past the BoT’s range of 1% to 3%.

The Thai baht fell 0.1% after the tourism-reliant

economy’s core inflation rose 2.28% for May, slightly higher

than the 2.2% projected in a Reuters poll. Headline inflation of

7.1% for the same period, however, far exceeded the forecast of

5.78%.

The central bank expects the baht to remain volatile and its

depreciation could result in rising import prices and inflation,

thereby signaling a hawkish BoT shift, said Tim Leelahaphan, an

economist at Standard Chartered Bank (Thai).

Meanwhile, stocks in the region fell.

The Indonesian benchmark slipped up to 1.8% to lead

Advertisement 3

Article content

losses and mark its worst session in nearly three weeks, while

the Thai index dropped 0.6%. Equities in the Philippines

and India fell 0.5% each.

The rupiah, which rose last week after the country

Lifted its ban on palm oil shipments, fell 0.2%.

Indonesia, the world’s biggest palm oil producer, has issued

around 302,000 tonnes of palm oil export permits since the

country restarted exports after halting it for three weeks in

efforts to control soaring prices at home.

In China, services activity contracted for a third straight

month in May, pointing to a slow recovery ahead. However,

investors brushed it aside for potential of growth as COVID-19

lockdowns eased in Shanghai and other cities. The Shanghai

Composite Index advanced 1.1%.

Advertisement 4

Article content

“We expect faster growth in the services sector in June as

lockdowns have gradually eased. However, we remain concerned

that there may be further lockdowns ahead,” analysts at ING said

in a note.

Global markets turned their focus on the US consumer price

report due later this week. Forecasts are in for a steep 0.7%

rise in May, though the annual pace is seen holding at 8.3%

while core inflation is seen slowing a little to 5.9%.

HIGHLIGHTS:

** Indonesian 10-year benchmark yields fall 26 basis points

to 6.970%

** Singapore’s 10-year benchmark yield fall marginally to

2.827%

** Thai policy rate should not be high during recovery –

FinMin

Asia stock indexes and currencies

at 0626 GMT

COUNTRY FX RIC FX FX INDE STOCKS STOCKS

DAILY % YTD % X DAILY YTD %

%

Japan +0.18 -11.9 <.n2>

China EC>

India -0.06 -4.30 <.ns ei>

Indonesi -0.19 -1.47 <.jk a se>

Philippi +0.05 -3.57 <.ps nes i>

Singapore +0.09 -1.86 <.st e i>

Taiwan -0.11 -5.88 <.tw ii>

Thailand -0.06 -2.82 <.se ti>

(Reporting by Tejaswi Marthi in Bengaluru)

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

Leave a Reply

Your email address will not be published.