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EMERGING MARKETS-Asian stocks, FX rattled by red-hot U.S inflation, Thai baht bucks trend

reuters.com · 06/13/2022 00:56
EMERGING MARKETS-Asian stocks, FX rattled by red-hot U.S inflation, Thai baht bucks trend

Indonesian rupiah down 0.8%, hits lowest in 3 weeks

Won down 1.5%, set for worst session since April 21

Thai c.bank calls for gradual rate hikes

By Savyata Mishra

- The Thai baht steadied on Monday after its central bank signalled gradual rate hikes to curb rising inflation, while other Asian currencies were hit by a double whammy of unexpectedly hot U.S. inflation and fears of an economic slowdown in China.

Indonesian rupiah IDR= fell 0.8% to its lowest since May 24, while the South Korean won KRW=KFTC underperformed most of its peers with a 1.5% drop, slipping for the third session in row.

The baht THB=TH pared early losses to trade largely steady, after its central bank governor suggested that rate hikes won't be delayed for too long given the continued increase in inflation in the Southeast Asian country. nLUN2V2018

Last week, the central bank left its key rate unchanged at a record low of 0.5% in a 4-3 split vote. nL4N2XU2QK nL4N2XX0MD

"The BoT (Bank of Thailand) has presented a marked shift in their policy statement with explicit recognition of demand side pressures and signalling that very accommodative monetary conditions is less needed," Vishnu Varathan, a strategist with Mizuho Bank said.

Consumer prices in the U.S. accelerated in May, dashing hopes that inflation had peaked, and had investors scrambling to price in an even steeper rate-hike path by the Federal Reserve to tame inflation. nL1N2XX118

This drove up the U.S. dollar, pressurising other regional currencies, with the Malaysian ringgit MYR= falling 0.3%, the Indian rupee INR=IN down 0.5% and a 0.4% slip in the Philippine peso PHP=.

Central banks' efforts to raise interest rates to curtail inflation will remain in focus this week. Overseas, the Fed and the Bank of England are expected to raise rates at their meetings later in the week, while other central banks have turned more hawkish in the past month, underscored by bigger-than-expected rate hikes from India and Australia.

Additionally, investors were also concerned about a resumption in COVID-19 lockdown in China. Beijing's most populous district Chaoyang announced three rounds of mass testing to quell a "ferocious" COVID-19 outbreak that emerged last week, shortly after the city relaxed curbs imposed during an outbreak in April. nL1N2XZ00Y

Stock markets in South Korea .KS11 slumped 3% while those in Jakarta .JKSE and India .NSEI tumbled over 2%. Malaysia .KLSE and Thailand .SETI shares followed suit, down about 1.2% and 1.6% respectively.

Globally, "more volatility is expected in the markets in the coming week, with stocks likely to face selling pressure and bond yields possibly inching higher," OCBC analysts said in a note.


HIGHLIGHTS:

** Singapore's 5-year benchmark yield is up 22.1 bps at 2.925%

** Indonesian 10-year benchmark yields are up 6.7 bps at 7.287%​​

** Indonesia's central bank will continue to strengthen its rupiah stabilisation measures as part of its policy mix and it expects the currency to be stable due to a low current account deficit forecast, a senior official said on Monday nL4N2Y00KN​​

** The Philippine central bank's monetary policy actions are not tied to the decisions of the United States' Federal Reserve, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said nP9N2X4008


Asia stock indexes and currencies at 0415 GMT




COUNTRY

FX RIC

FX DAILY %

FX YTD %

INDEX

STOCKS DAILY %

STOCKS YTD %

Japan

JPY=

-0.46

-14.78

.N225

-2.64

-6.11

China

CNY=CFXS

-0.46

-5.70

.SSEC

-1.11

-10.75

India

INR=IN

-0.49

-4.97

.NSEI

-2.60

-9.07

Indonesia

IDR=

-0.75

-2.80

.JKSE

-2.12

5.39

Malaysia

MYR=

-0.29

-5.64

.KLSE

-1.62

-6.24

Philippines

PHP=

-0.38

-4.25

.PSI

-0.89

-9.14

S.Korea

KRW=KFTC

-1.47

-7.69

.KS11

-3.04

-15.47

Singapore

SGD=

-0.21

-2.98

.STI

-0.62

1.23

Taiwan

TWD=TP

-0.54

-6.91

.TWII

-2.41

-11.83

Thailand

THB=TH

-0.10

-4.07

.SETI

-1.22

-2.71


Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

Asian stock marketshttps://tmsnrt.rs/2zpUAr4

(Reporting by Savyata Mishra in Bengaluru
Editing by Shri Navaratnam)

((Savyata.Mishra@thomsonreuters.com;))