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Asian FX wobbles on recession fears, Thai baht firms on H2 growth outlook

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Most Asian currencies weakened on Tuesday

a day after grim data from the world’s two biggest economies

reignited worries about a global recession, while the Thai bhat

advanced after the nation’s central bank forecast a rebound in

second half growth.

The Indonesian rupiah, Malaysian ringgit,

Philippines peso and the Taiwan dollar weakened

between 0.1% and 0.2% against the U.S. dollar, which

hovered near a one-week high on safe-haven demand.

“Asian markets may range trade today as investors continue

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to digest the recent soft economic data coming out from both

China and the U.S., and their implications for policy stimulus,”

analysts at OCBC Bank wrote.

Monday’s underwhelming Chinese activity data spanned

industrial output, retail sales and real estate, which was

followed by frail U.S. single-family homebuilders’ confidence

and weakness in a New York state factory activity survey.

Resuming trade after a public holiday, the South Korean won

led the fall in the region with a 0.6% decline and

was on track for its worst day in over a week. But a boost to

chipmaker shares buoyed the country’s benchmark stock index

to its highest level in nearly two months.

The peso slipped for the third straight session,

weakening 0.1%, as the country’s central bank was set to deliver

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a half-point point rate rise on Thursday, a Reuters poll showed.

The Bangko Sentral ng Pilipinas (BSP) was also widely

expected to hike rates by a quarter-point in September to catch

up with its peers in containing soaring inflation. That would

add to the hefty unscheduled 75 basis point rise in July, its

most aggressive since the central bank shifted to an

inflation-targetting approach in 2002.

The rupiah fell for the second straight session after

the country’s statistic bureau on Monday warned that its

windfall export earnings, which heavily benefited from high

commodity prices, may start dwindling despite

larger-than-expected surplus in July.

The local currency has firmed 0.5% in August so far on the

back of a nascent economic recovery. It had lost over 4% in the

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first seven months of the year.

Indonesia is also one of the few laggards in the region that

is yet to begin monetary tightening and is set to meet next week

against the backdrop of strong second-quarter growth and soaring

inflation.

Bucking the broader trend, the Thai baht rose 0.4%

after the country’s central bank said that the domestic economy

was expected to continue growing in the second half of the year

as tourism picks up, despite a weaker-than-expected second

quarter.

“We expect the economy to strengthen further in 2H, driven

by a wider reopening from July,” Chua Han Teng, economist at DBS

said.

“Private consumption and tourism, already rising, are set to

gather additional momentum.”

HIGHLIGHTS

** Indonesian 10-year benchmark yields are up 3.2 basis

points at 7.081%​​

** Leading gains in KOSPI are Samsung Electronics

up 1.50% and SK Hynix up 4.39%

Asia stock

indexes and

currencies

at 0441 GMT

COUNTRY FX FX FX INDE STOCKS STOCKS

X DAILY YTD %

RIC DAILY YTD %

% %

Japan 75 25>

China

FXS

>

India

N>

Indonesia 2 SE>

Malaysia 0 SE>

Philippines 7 I>

S.Korea

FTC

>

Singapore 1 I>

Taiwan

P>

Thailand

H>

(Reporting by Indranil Sarkar in Bengaluru

Editing by Shri Navaratnam)

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