Asian FX cautious ahead of Fed minutes, Thai baht jumps on tourism prospects

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The Thai baht and Singapore dollar

firmed on Wednesday among weak Asian currencies as investors

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remained risk-averse ahead of the release of U.S. Federal

reserve policy meeting minutes and as China’s COVID-19 cases

continued to mount.

The baht outperformed with a 0.5% rise to its

highest since May 31, benefiting from expectations that China’s

scaling back of stringent anti-virus controls could boost

tourism.

Thailand is expecting at least 5 million Chinese tourist

arrivals this year as China reopens its borders, in what could

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be a further boost to the Southeast Asian country’s economy and

its vital tourism sector.

Although optimism over inbound Chinese tourists could power

the baht higher in the near term, Poon Panichpibool, markets

strategist with Krung Thai Bank, warned of the possibility that

another COVID wave could follow.

“This could cause more stress for the healthcare system if

the government is not well-prepared,” he said, adding that such

a scenario could spur profit-taking on Thai assets.

The Singapore dollar gained 0.3%. It was the best

performing regional currency in 2022, supported by proactive

tightening by its monetary policy authority.

China’s yuan hovered around a four-month high

against the dollar on Wednesday, boosted by investor

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expectations of more policy support to boost the economy.

The greenback wobbled in Asian trading hours, down

0.25% after a steep spike overnight.

Minutes from the Fed’s December meeting, when it cautioned

that rates may need to remain higher for longer, are due to be

released later on Wednesday and will be parsed for clues on

whether more policy tightening is likely.

Most Asian emerging currencies remained subdued, weighed

down by concerns over a projected global slowdown.

The Indonesian rupiah was down 0.1% and the South

Korean won fell 0.3%.

Malaysia’s ringgit was flat after data earlier in the

day revealed a further contraction of manufacturing activity in

December.

“We expect slower activities in regional production will

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remain for now on the back of weaker demand and in anticipation

of slow growth in advanced markets,” MIDF Research said in an

emailed note.

Among equities, Philippine stocks jumped nearly 2% to

their highest since Dec. 2.

MSCI’s broadest index of Asia-Pacific shares outside Japan

rose 0.5%, set for a third straight day of gains

for the year.

Jakarta and Indian stocks were down 0.3%

each, while shares in Thailand fell 0.4%.

HIGHLIGHTS:

** Bank of Japan Governor Haruhiko Kuroda said the central

bank would maintain its loose monetary policy in order to

sustain inflation at its 2% target, along with wage growth.

** South Korean shares recovered early losses and turned

higher on Wednesday, with heavyweight chipmakers leading the

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gains. The won weakened, while the benchmark bond yield fell.

** Japan’s Nikkei hit a more than three-month low on

the first trading session of 2023 on Wednesday, tracking Wall

Street’s weak finish overnight.

Asia stock indexes and

currencies at 0428 GMT

COUNTRY FX RIC FX FX INDEX STOCKS STOCK

DAILY YTD % DAILY S YTD

% % %

Japan +0.15 +0.23 -1.26 -1.26

China +0.40 +0.20 0.32 1.21

India +0.04 -0.16 -0.33 0.37

Indonesia -0.13 -0.32 -0.30 0.25

Malaysia +0.02 -0.02 -0.13 -1.56

Philippines -0.02 -0.48 1.93 2.23

S.Korea -0.25 -0.76 1.36 0.56

Singapore +0.23 -0.13 -0.01 -0.18

Taiwan -0.03 +0.00 0.06 0.67

Thailand +0.38 +0.96 -0.39 0.22

(Reporting by Savyata Mishra in Bengaluru; Editing by Edmund

Klamann)