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Philippine peso leads Asian FX gains, stocks off as global rates in focus

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Most Asian currencies climbed on

Friday, as a buoyant dollar took a breather with gains led by

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the Philippine peso, a day after the country’s central bank said

it would match the Federal Reserve’s 75-basis-point rate hike to

quell rising inflation.

The U.S. dollar index, which eased 0.3%, still looked

set to post its best week in over a month. The Thai baht

and the Singapore dollar advanced 0.5% and 0.3%,

respectively. The Chinese yuan edged 0.2% higher.

“Dollar continues to see modest upward pressures as markets

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digest the net hawkish messaging out of the Fed’s decision,”

Maybank analysts said in a note.

The peso, which has tumbled 13% this year against the

greenback and is Southeast Asia’s worst-performing currency,

rose 0.6% after Bangko Sentral ng Pilipinas (BSP), on Thursday,

said it will hike rates later this month in tandem with the Fed

to maintain the interest rate differential.

“BSP’s pre-announced move was carried out to help steady the

peso, which was expected to come under significant pressure due

to the Fed 75bp rate hike. If BSP is successful in limiting peso

weakness, it can help mitigate imported inflation to a modest

extent,” said Nicholas Mapa, senior economist at ING.

Philippine inflation accelerated to its fastest pace in 14

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years in October, backing expectations the central bank will

keep tightening monetary policy.

“BSP rate hikes will hopefully re-anchor inflation

expectations to help prevent runaway inflation but should supply

side pressures persist, we expect so called second round effects

to proliferate even in 2023,” Mapa added.

In Thailand, its central bank said on Thursday monetary

policy will take into account the country’s economic growth,

inflation rate, and financial stability. The baht has fallen

11.5% so far this year against the dollar.

Regional stocks were on the back foot, after the Wall

Street fell for a fourth straight session, as lingering concerns

about the hawkish tone struck by the Fed on Wednesday weighed on

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market sentiments.

Equities in the Philippines and Indonesia

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

slid 0.3%

“Asian markets will tread lightly as investors will closely

eye the non-farm payrolls report due later in the day for signs

pointing to the notable impact the Fed’s rate hikes were

beginning to have on slowing the economy,” OCBC analysts said.

HIGHLIGHTS:

** Indonesian 10-year benchmark yields rise 3.9 basis points

to 7.474%

** Oil prices slid on fears U.S. interest rates will go

higher than previously expected and fresh concerns that COVID

outbreaks will dent fuel demand in China

Asia stock indexes and currencies at 0343 GMT

COUNTRY FX RIC FX FX INDE STOCKS STOCKS

DAILY % YTD % X DAILY YTD %

%

Japan +0.10 -22.3 <.n2>

China 5 EC>

India +0.21 -10.1 <.ns ei>

Indonesi -0.22 -9.41 <.jk a se>

Malaysia -0.03 -12.2 <.kl se>

Philippi +0.62 -12.8 <.ps nes i>

S.Korea 8 11>

Singapor +0.30 -4.83 <.st e i>

Taiwan +0.04 -14.1 <.tw ii>

Thailand +0.46 -11.6 <.se ti>

(Reporting by Tejaswi Marthi in Bengaluru

Editing by Shri Navaratnam)

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