Most Asian currencies gain on dollar dip; Philippine stocks slide

September 27, 2022 - 3:24 PM
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A janitor wearing a face mask cleans the lobby of the Philippine Stock Exchange amid the coronavirus disease (COVID-19) outbreak, in Taguig City, Metro Manila, Philippines, Sept. 30, 2020. (Reuters/Eloisa Lopez/File Photo)
  • Asian markets in cautious mood
  • Philippine stocks near 2-year low
  • South Korea’s won leads gains
  • Malaysia’s ringgit lingers at over 24-year low

Asian emerging currencies steadied on Tuesday as the dollar took a breather after notching a 20-year high, while Philippines shares tumbled following the International Monetary Fund’s warning about the country’s economic growth.

India’s rupee <INR=IN> and South Korea’s won <KRW=KFTC> firmed 0.4% and 0.5%, respectively, while the Thai baht <THB=TH> rose 0.2%.

Investors’ appetite for risk-sensitive Asian assets got a boost as the U.S. dollar index <=USD> fell 0.5% to 113.35, pulling back from a two-decade peak of 114.58 on Monday. [USD/]

However, the dollar has gained about 20% so far this year, on the back of higher interest rates, and its unrelenting rally has weighed heavily on the region’s emerging currencies, with most of them nursing heavy losses this year.

“King dollar continues to hold court within the Asian FX universe amid the Fed’s (U.S. Federal Reserve) aggressive battle against multi-decade high inflation,” said Han Tan, chief market analyst at Exinity Group.

“Further drastic declines in Asian FX could heighten the prospects of more central bank intervention in the region in order to shore up support for their respective currencies.”

The peso <PHP=>, which has slumped 13.5% this year and is the second-worst performing currency in the region, was up marginally, while Philippine stocks <.PSI> hit their lowest level since October 2020.

The International Monetary Fund on Monday flagged that the country’s economy will grow more slowly this year than previously thought due to the global economic slowdown and tightening financial conditions.

Among other regional currencies, China’s yuan <CNY=CFXS> weakened 0.3% and led losses. [CNY/]

Data showed that profits at the country’s industrial firms shrank at a faster pace in January-August, as strict COVID restrictions and a deepening property slump weighed on domestic demand.

China’s zero-COVID policy has led to lockdowns of cities and shut down factory operations across the world’s second-largest economy and Southeast Asia’s biggest trading partner.

“We expect policy makers to take important steps in the coming months that would be consistent with a broad reopening from the spring of 2023,” analysts at Morgan Stanley said in a note, adding the recovery will strengthen from the second quarter.

Meanwhile, Malaysia’s ringgit <MYR=> fell 0.2% and Indonesia’s rupiah <IDR=> shed 0.1% to hit a more-than-two-year low.

A senior official said on Monday that Bank Indonesia would be ready with its “triple intervention” in the foreign market to prevent any excessive fall in the rupiah, which has lost about 6% so far this year against the dollar.

Equities in Seoul <.KS11> were flat, while Singapore’s benchmark index <.STI> retreated 0.7%.

Stocks in Taipei <.TWII> and equities in Shanghai <.SSEC> rose 0.4% and 0.8%, respectively.

The following table shows rates for Asian currencies against the dollar at 0624 GMT.

COUNTRYFX RICFX DAILY %FX YTD %INDEXSTOCKS DAILY %STOCKS YTD %
Japan<JPY=>+0.35-20.22<.N225>
China<CNY=CFXS>-0.26-11.16<.SSEC>0.78-15.51
India<INR=IN>+0.37-8.60<.NSEI>0.04-1.90
Indonesia<IDR=>-0.13-5.91<.JKSE>-0.497.77
Malaysia<MYR=>-0.17-9.66<.KLSE>0.00-9.85
Philippines<PHP=>+0.08-13.53<.PSI>-4.72-16.26
S.Korea<KRW=KFTC>+0.47-16.55<.KS11>0.00-25.41
Singapore<SGD=>+0.26-5.94<.STI>-0.681.17
Taiwan<TWD=TP>+0.12-12.87<.TWII>0.35-24.11
Thailand<THB=TH>+0.15-11.89<.SETI>-0.56-2.74

—Reporting by Upasana Singh in Bengaluru