Asian currencies broadly weakened on
Monday ahead of crucial U.S. consumer inflation data due this
week, which could provide further clues on the Federal Reserve’s
policy tightening path.
The rupee depreciated 0.6% as investors braced for
India’s November inflation print, which will be released later
in the day.
India’s inflation, which has stayed above the upper end of
the Reserve Bank of India’s 2%-6% tolerance band all year,
likely cooled to a nine-month low of 6.40% in November,
according to a Reuters poll of economists.
Currencies elsewhere in the region also declined. Malaysia’s
ringgit fell 0.3% and the South Korean won
dipped 0.5%. The Philippine peso fell 0.6% to lead
As concerns over a potential recession in major economies
grow, investors are considering how the U.S. inflation print due
on Tuesday will affect the Fed’s interest rate hike trajectory
over the coming months.
The Fed is widely expected to raise rates by 50 basis points
on Wednesday at its last meeting of 2022, though the focus will
also be on the central bank’s updated economic projections and
Fed Chair Jerome Powell’s press conference.
Meanwhile, data released last week showed Philippine annual
inflation surged to a 14-year high in November, with a pickup in
prices seen supporting the case for a half-percentage point
interest rate hike this month.
Analysts at ING expect the country’s central bank to retain
its hawkish stance next year, taking into account the elevated
Stocks in Manila, however, advanced 0.7%.
In Taiwan, the central bank is likely to lift the benchmark
discount rate by 12.5 basis points to 1.75% at its
quarterly meeting on Thursday, according to 23 economists
surveyed by Reuters.
“Emerging Asia’s hiking cycle generally has yet to end as
high inflation continues to keep the central banks on a
tightening path,” Analysts at Barclays said.
“Demand-pull inflation pressures remain relatively steady
across Emerging Asia, which should overall keep the region’s
central banks closer to the hawkish, rather than dovish, end of
the policy spectrum,” they added.
Stocks across the region were largely subdued on Monday.
Markets in Shanghai and Kuala Lumpur fell 0.3%,
while Jakarta added 0.1%.
Markets in Thailand were closed for a public holiday.
** Indonesian 10-year benchmark yields fall 1.2 basis points
** Malaysia’s October factory output up 4.6% Vs Reuters poll
of 8.1% rise
** U.S. Nov producer price index for final demand rose 7.4%
Asia stock indexes and currencies
at 0700 GMT
COUNTRY FX RIC FX FX INDEX STOCKS STOCKS
DAILY % YTD % DAILY YTD %
Japan -0.24 -15.9 -0.21% -3.30%
India -0.37 -9.99 -0.05 6.53
Indonesia -0.28 -8.80 -0.09 1.94
Malaysia -0.32 -5.69 -0.33 -4.24
Philippin -0.36 -8.21 0.23 -7.40
Singapore -0.06 -0.33 -0.09 3.83
Taiwan -0.30 -9.89 -0.63 -19.79
Thailand – -3.98 – -2.08
(Reporting by Roushni Nair in Bengaluru; editing by Uttaresh.V)