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Philippine peso hits record low as Asian currencies hit by risk aversion

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The Philippine peso hit a record low and

other Asian currencies fell against the greenback on Monday as

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Russia’s indefinite closure of its main gas supply pipeline to

Europe and extended COVID curbs in China bolstered the

safe-haven dollar.

Shares across Asia also lost ground, while the euro sunk to

a two-decade low.

“Haven demand was arguably triggered by headline

geo-political risk dimensions to a more aggressive posture by

Russia in suspending gas supplies to Europe,” said Vishnu

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Varathan, head of economics and strategy at Mizuho Bank.

The peso declined 0.1%, while the Taiwanese dollar

and Singapore dollar lost between 0.2% and 0.5%.

Vietnam’s dong dropped 0.4% to hit a near

two-and-half-year low after an extended holiday weekend.

Riskier emerging market assets have come under immense

pressure recently, with markets pricing a more hawkish response

from central banks since the Jackson Hole symposium last month.

Among other Asian currencies, South Korea’s won

slid 0.7% to hit its lowest level since April 2009.

In China, COVID-19 outbreaks and a gloomy growth outlook

have further dampened risk sentiment.

The yuan has declined over 9% this year, and was

down 0.4% on Monday, hitting its lowest level since August 2020.

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In Indonesia, subsidized fuel prices were hiked by about 30%

over the weekend. High energy subsidies had restrained

Indonesia’s inflation, allowing the central bank to delay

raising interest rates until last month, well behind regional

and global peers.

“For Bank Indonesia, the fuel price adjustment is a

considerable game changer, given that the fiscal inflation

shield is no more,” said Wellian Wiranto, an economist at OCBC

bank.

He expects the central bank to hike rates by at least

another 50 basis points over the rest of the year.

The rupiah dipped 0.1%, but stocks in Jakarta

rose 0.6%.

Share benchmarks in Seoul and Manila dropped

0.4% and 0.6%, respectively, while those in Singapore and

Mumbai moved higher.

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Shares in Thailand and the baht were both

weaker after the country reported that consumer price index

rose 7.86% in August from a year earlier, the fastest pace in

14-years, but in-line with expectations.

Bank of Thailand’s chair said that inflation is set to peak

in the third quarter and is likely to be more than 6% this year.

Over the week, Asia-focused investors will be looking out

for key inflation data from China, the Philippines and Taiwan,

as well as an interest rate decision from the Malaysian central

bank.

HIGHLIGHTS

** China’s Shenzhen to adopt tiered COVID measures; Chengdu

extends lockdown

** Yield on Indonesia’s 10-year benchmark bond

hits highest level since August 22

** S.Korea pledges pre-emptive action to stabilize markets

Asia stock indexes and currencies at 0409 GMT

COUNTRY FX RIC FX FX YTD INDEX STOCK STOCKS

DAILY % S YTD %

% DAILY

%

Japan -0.10 -18.00 -0.10 -4.06

China -0.44 -8.33 0.10 -12.37

India -0.05 -6.90 0.35 1.42

Indonesia -0.15 -4.47 0.52 9.62

Malaysia -0.07 -7.16 -0.04 -4.91

Philippines -0.11 -10.45 -0.50 -6.50

S.Korea -0.58 -13.26 -0.29 -19.32

Singapore -0.23 -3.95 0.25 2.88

Taiwan -0.49 -9.92 0.03 -19.44

Thailand -0.11 -9.14 -0.30 -2.43

(Reporting by Harish Sridharan in Bengaluru; Editing by Edwina

Gibbs)

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