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Asian FX eye weekly losses on dollar’s gains post-Fed

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Most Asian currencies were poised, on

Friday, to post losses for the week, as the U.S. dollar looked

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set to clock its best week in over a month on bets that the

Federal Reserve could take interest rates above 5% next year.

For the week, the Indonesian rupiah fell 1.1% and is

on track for its worst week since Oct. 21. The Singapore dollar

fell 0.3%, while the Philippine peso and the

Malaysian ringgit skid 0.6% each for the week.

The U.S. dollar index, was on track for a weekly gain

of nearly 2%, its largest since September.

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Fed rate futures now point to a terminal rate of about 5.15%

by mid-2023, after the Fed raised rates by 75 basis points (bps)

earlier this week.

“USD remains broadly firmer post-U.S. Federal Reserve

meeting. Fed chair Jerome Powell’s reference to higher peak rate

may still undermine sentiments in the interim and that means

pressure on Asian FX,” analysts at OCBC said.

On Friday, the Vietnamese dong fell 0.1% to hit a

fresh record low of 24,876 per dollar, while the benchmark stock

index fell 4.4%, marking its worst day in nearly a month.

Regional stocks were on the back foot, after Wall Street

fell for a fourth straight session overnight, as lingering

concerns about the Fed’s hawkish tone weighed on sentiment.

Equities in the Philippines and Indonesia

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fell 0.9% and 0.6%, respectively. The Taiwan benchmark

slid 0.3%.

Investors will closely watch the U.S. non-farm payrolls

report, due later in the day, for signs the Fed’s rate hikes are

beginning to have a notable impact on slowing the economy.

“Signs of a softer-than-expected labor market will be what

equity bulls need to fuel a near-term recovery,” said Yeap Jun

Rong, market strategist at IG.

The peso, which has tumbled 13% this year and is

Southeast Asia’s worst-performing currency, rose 0.6% after the

Philippines central bank said it will hike rates in tandem with

the Fed to maintain the rate differential.

Philippine inflation accelerated to its fastest pace in 14

years in October, backing expectations of continued monetary

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policy tightening. Shreya Sodhani, research analyst at Barclays,

expects a 50-bps hike in December after the planned 75-bps hike

in November.

HIGHLIGHTS:

** Indonesian 10-year benchmark yields rise 3.9 bps to

7.474%

** India cenbank may set 7.60% as cut-off yield for 14-yr

bond

** Thai interest rates will be based on domestic situation,

not Fed – Finmin

Asia stock indexes and currencies at 0604 GMT

COUNTRY FX RIC FX FX INDE STOCKS STOCKS

DAILY % YTD % X DAILY YTD %

%

Japan +0.23 -22.2 <.n2>

China 2 EC>

India +0.44 -9.92 <.ns ei>

Indonesi -0.19 -9.38 <.jk a se>

Malaysia -0.03 -12.2 <.kl se>

Philippi +0.62 -12.8 <.ps nes i>

S.Korea 5 11>

Singapor +0.41 -4.72 <.st e i>

Taiwan +0.16 -14.0 <.tw ii>

Thailand +0.89 -11.2 <.se ti>

(Reporting by Tejaswi Marthi in Bengaluru; Editing by Savio

D’Souza)

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