Thai baht, Philippine peso firm on inflation data; Asian stocks gain

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The Thai baht and Philippine peso firmed

on Tuesday on bets for further interest rate hikes after data

showed spikes in inflation, while most Asian equities edged

higher on signs of thawing China-US tensions.

The baht and the peso pared losses and rose

0.04% and 0.2%, respectively, while most Asian currencies were

largely trading lower against a strong dollar.

Philippine consumer prices in June were 6.1% higher than a

year earlier.

That inflation rate was the highest in nearly four years and

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cemented expectations for more interest rate rises. It also

increased the prospect of the central bank acting more

aggressively to temper price pressures.

The narrowing gap between Philippine and US interest rates

has weighed on the peso, which is trading near a 17-year

low against the US dollar.

Thailand’s headline consumer price index was 7.66% higher in

June than a year before. The increase was stronger than

expected, driven by higher energy prices.

“The baht and peso are certainly off the lows as

above-forecast core inflation may spur the central bank in

Thailand to hike rates, and surging inflation numbers in the

Philippines have also solidified expectations for more interest

rate hikes,” said Mitul Kotecha, senior EM strategist with TD

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Securities.

Uneasy Asian equities got some relief from a report that

US president Joe Biden was leaning towards a decision on

easing tariffs on goods from China. Equities were also helped by

news that Chinese vice premier Liu He had spoken to US

Treasury Secretary Janet Yellen.

“If at all, tariff lifting will more likely be for the more

inflation-sensitive goods, so on balance it should be positive

for Asian equity markets, as it should help facilitate trade.

But it comes against a backdrop where global trade is declining

and Asia trade patterns are also worsening,” added Kotecha.

Stocks climbed 1.5% in Manila and 1.6% in Jakarta

.

“No one believes that lowering tariffs would meaningfully

lower elevated inflation that is blamed on the war-led high

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energy prices and supply chain disruptions. … Beijing, which

has moved on to meet the new trade and geopolitical landscape

challenges, will probably insist on removing all tariffs,” said

Philip Wee, Senior FX Strategist at DBS Bank.

In South Korea, consumer prices were 6.0% higher in June

than a year earlier. The annual rise was the fastest since 1998

and fanned expectations the central bank could deliver a 50

basis point rake hike next week.

Nonetheless, the inflation rate was not much higher than

expected. Stocks in Seoul rose as much as 1.8%,

rebounding from a 20-month low, while the won slipped

0.2%.

HIGHLIGHTS:

** Indonesian 10-year benchmark yields are up 5.3

basis points at 7.325%​​

** Top gainers on FTSE Bursa Malaysia Kl Index include

Petronas Dagangan Bhd up 1.84%, PPB Group Bhd

up 1.67%, and Inari Amertron Bhd up ​1.57%

Asia stock indexes and

currencies at 0437 GMT

COUNTRY FX RIC FX FX INDE STOCK STOCK

DAILY YTD % XSS YTD

%DAILY%

%

Japan -0.43 -15.5 <.n2>

China EC>

India -0.15 -5.99 <.ns ei>

Indones -0.13 -4.90 <.jk ia se>

Malaysia -0.07 -5.66 <.kl a se>

Philipp +0.02 -7.41 <.ps ines i> 1

S.Korea 11>0

Singapo -0.03 -3.37 <.st re i>

Taiwan -0.13 -7.03 <.tw ii> 8

Thailan -0.01 -6.41 <.se d ti>

(Reporting by Riya Sharma in Bengaluru; Editing by Bradley

Perrett)