EMERGING MARKETS-Asian stocks, FX weaken as Poland blast frays sentiment
By Navya Mittal
Nov 16 (Reuters) -
Emerging Asian currencies and stock markets were in the red on Wednesday amid fears of escalating geopolitical tension after NATO-member Poland reported an explosion by what it called a Russia-made projectile.
that killed two people in Poland was probably fired from Russia, U.S. President Joe Biden said on Wednesday after an emergency meeting of NATO leaders. Russia denied it was responsible for the explosion but Polish officials said the missile was Russian-made.
The South Korean won and Thai baht led losses as reports of the explosion triggered an outflow from risk-sensitive emerging markets into safe-havens such as the U.S. dollar and gold.
The South Korean won KRW=KFTC fell 1% and the Thai baht THB=TH lost 0.7%.
"The action kicked off the safe-haven trade, driving bond yields lower and firming the U.S. dollar up as traders moved back into wartime headline watch," said Stephen Innes, managing partner at SPI Asset Management.
The Indonesian rupiah IDR=, Philippine peso PHP= and Indian rupee INR= shed about 0.5% each against a firming greenback, while Malaysia's ringgit MYR= reversed gains made earlier in the session to slip 0.2%.
Stocks across Asia were also pressured. Equities in Jakarta .JKSE hit a one-month low, Malaysia's benchmark index .KLSE fell for the third straight session, and shares in Manila .PSI snapped a three-day wining streak.
News of the explosion and its potential implications took some focus away from two key central bank meetings due on Thursday. Markets have already priced in a 75-basis-point interest rate hike in the Philippines and a 50-basis-point rise in Indonesia.
"It does look like a period of consolidation as markets crest another round of heightened interest rate worries," DBS analysts said in a .
Malaysia is also due to hold an election this weekend, which analysts said could trigger some -term volatility in the ringgit.
"There could still be quite a bit of uncertainty in terms of policy making that could reverse some of the MYR gains in the -term," Maybank analysts said in a .
The currency strengthened earlier this week as the dollar weakened due softer U.S. inflation data and amid an improvement in broader sentiment after China eased some of its stringent COVID restrictions. The ringgit had jumped 4% in three days earlier this week.
** NATO, G7 countries to remain in close contact over Poland blasts
** Palm oil steady as higher stocks offset rising exports
** Indonesia proposes to Canada setting up OPEC-like group for
Asia stock indexes and currencies at 0408 GMT
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(Editing by Ana Nicolaci da Costa)