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
That inflation rate was the highest in nearly four years and
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
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
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
** 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
Japan -0.43 -15.5 <.n2>
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
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