Most Asian currencies gain on dollar weakness; ringgit slumps

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Most Asian emerging markets rose on Tuesday, with the

South Korean won and the Singapore dollar surfacing as top gainers, as the U.S.

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dollar slipped on the prospect of potential easing in China’s strict pandemic

curbs following unprecedented protests.

The U.S. dollar weakened after a rally in the previous session on

mounting worries over China’s COVID-19 situation, although the greenback

remained marginally supported by hawkish comments from Federal Reserve

officials.

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Markets globally are pricing in comments from Fed officials who flagged a

need for continued policy tightening to gain control of inflation, with no

clarity on how far the central bank will need to boost short-term borrowing

costs.

“The Fed speakers are very clear that in the next FOMC meeting in December,

we will see a deceleration in the pace of rate hikes to 50 basis points,” said

Alvin Tan, head of FX strategy at RBC Capital Markets.

Tan added that markets were anticipating slight cuts in interest rates in

the second half of 2023.

In Asia, the South Korean won firmed 1% with the Singapore dollar

and Thailand’s baht appreciating 0.4% each.

China’s yuan strengthened 0.6% with stocks advancing 2.1%

as unrest over stringent COVID-19 policies placed by authorities appear to have

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come under control.

“Tighter security in China yesterday has aided to refrain large-scale

protests from materializing (some spill-over to Hong Kong), but nevertheless,

the absence of any clear escalation in protests could aid to bring some calm to

markets,” analysts at IG said in a note.

Malaysia’s ringgit depreciated 0.6% for its biggest percentage loss

since April 25 as uncertainties around the country’s political footing dampened

investor sentiment.

Since mid-last week, when Malaysia got a new leader, the ringgit has

appreciated 1.5%, but the unit lost more than 7% so far this year.

Shares in Singapore advanced 0.9%, gaining for the first time in five days

after last week’s data signaled the island nation’s economic growth came in

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slower than anticipated.

“Growth in the fourth quarter could potentially fall below 2% YoY with risk

of another sequential decline due to further drag from the manufacturing

sector,” analysts at DBS Group Research concluded in a note.

The note added that economic growth momentum will slow further going into

fiscal 2023.

Across the region, some stock indexes have gained strength. Shares in

Singapore, South Korea and Thailand advanced between 0.5%

and 1%. Still, markets in Indonesia, Malaysia and the

Philippines lost between 0.1% and 1%.

Separately, S&P Global Ratings lowered its economic growth forecast for

emerging markets for the coming year, citing persistent pressures from the

Russia-Ukraine conflict and the lingering COVID-19 pandemic.

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Investors will be closely monitoring China’s factory activity data due

Wednesday, where the world’s second-largest economy and Southeast Asia’s largest

trading partner is expected to counter a deepened contraction in November as

COVID-19 woes bite.

HIGHLIGHTS:

** Indonesian 10-year benchmark yields rise 1.5 basis points to 6.982%

** Singapore’s stock index snaps four-day losing streak

** China’s factory activity contraction likely deepened in Nov on COVID woes

Asia stock indexes and currencies at

0640 GMT

COUNTRY FX RIC FX FX YTD INDEX STOCKS STOCKS

DAILY % % DAILY YTD %

%

Japan +0.33 -16.90 -0.5 -2.18

China +0.57 -11.31 2.18 -13.58

India -0.04 -9.03 0.40 7.40

Indonesia -0.11 -9.45 -0.12 6.49

Malaysia -0.64 -7.55 -1.03 -4.32

Philippines +0.07 -9.82 0.17 -6.03

S.Korea +1.03 -10.40 1.04 -18.28

Singapore +0.39 -1.81 0.95 4.71

Taiwan +0.16 -10.61 1.05 -19.26

Thailand +0.31 -6.31 0.49 -1.98

(Reporting by Roushni Nair in Bengaluru; Editing by Sherry Jacob-Phillips)