Most currencies and stock markets in
Asia trended lower on Friday, as fears of excessive rate hikes
in the United States leading to a recession resurfaced, while
inflation numbers from Singapore and Malaysia came in line with
Multiple U.S. economic indicators, including the third
quarter GDP data, highlighted the U.S. economy’s resilience.
Investors fear this may provide further impetus to the Federal
Reserve to continue hiking rates, potentially tipping the
economy into a recession.
South Korea’s won weakened 0.4% on the day, and
Indonesia’s rupiah weakened 0.2%.
“While some may argue that the data is backward looking and
the resilient numbers reduce the risk of a ‘hard landing,’ the
confluence of stronger demand and more persistent prices also
suggest that more work needs to be done from the Fed,” said Yeap
Jun Rong, a market analyst at IG.
Meanwhile, Malaysia reported consumer prices for November
rising in line with market expectations, with a rise in food
prices as the main contributor.
“BNM is more focused on domestic economic conditions rather
than the U.S. Federal Reserve or the MYR,” analysts at Barclays
said, forecasting a 25 basis points (bps) interest rate hike by
the Bank Negara Malaysia (BNM) in January.
The country’s central bank has raised rates four times this
year, by 25 basis points each time.
Malaysia’s ringgit did not react and continued to
trade at around 4.419 to the dollar, 0.1% weaker on the day.
Singapore’s November core inflation reading also came in
broadly in line with expectations. The Singapore dollar,
which was flat leading up to the data release, rose about 0.2%
to trade at 1.3507 to the dollar by 0504 GMT.
Singapore’s benchmark yield was last seen about
5.7 bps higher on the day at 2.965%.
The Singapore dollar is set to be the best-performing Asian
currency this year, having weakened just 0.1% to the dollar. The
Singapore dollar is only allowed to fluctuate within a set range
decided by the central bank.
In comparison, other Asian currencies have weakened more
than 4%, with India’s rupee weakening over 10% so far
Sentiment in the markets was also soured by rapid spread of
COVID-19 in China, with a health official expecting infections
to peak within a week. The yuan was broadly
Stocks in Asia were broadly lower, with South Korean stocks
down 1.8%, set to be the worst performing equities among
emerging Asian markets as they had lost more than 22% so far
this year. Markets in Taiwan, India and
Singapore were also down between 0.5% and 1.3%.
** Japan Nov core consumer inflation at four-decade high
** Chinese central bank makes biggest weekly liquidity
injection into banking system in nearly two months
Asia stock indexes and currencies at
COUNTRY FX RIC FX FX YTD INDEX STOCKS STOCKS
DAILY % DAILY YTD %
Japan -0.26 -13.26 -1.03 -8.88
China +0.00 -9.05 -0.64 -16.62
India -0.11 -10.29 -1.42 2.97
Indonesia -0.16 -8.68 -0.23 3.45
Malaysia +0.05 -5.79 0.06 -6.28
Philippines -0.12 -7.74 -0.50 -8.13
S.Korea -0.36 -7.18 -1.83 -22.30
Singapore +0.16 -0.13 -0.55 4.09
Taiwan -0.22 -9.94 -1.19 -21.67
Thailand +0.30 -3.98 -0.11 -2.57
(Reporting by Harshita Swaminathan; Editing by Eileen Soreng)