The South Korean won and Thailand’s baht led declines among emerging Asian currencies on Tuesday, while more uninspiring data from China pointed towards further weakening in Asia’s largest economy.
China’s services activity expanded at the slowest pace in eight months in August, a private-sector survey showed.
“Only a more forceful policy package could really turn around sentiment,” Wei Liang Chang, Macro strategist (FX and Credit) with DBS Bank said, “But they do not want house prices to go back to elevated levels again. So, their policy stance is still going to be more or less restrained.”
The won eased nearly 0.5% to more than a week’s low, and the baht slipped by a similar amount.
Annual inflation in South Korea accelerated to 3.4% in August while the month-on-month rate was the fastest since early 2017.
Thailand’s inflation exceeded analysts expectations. Inflation in the Philippines also quickened for the first time in seven months.
“The August upside surprise now has Bangko Sentral ng Pilipinas on notice although we doubt one data point will be enough for Governor Remolona to flip back into tightening mode,” Nicholas Mapa, a senior economist with ING said in a research note.
South Korean won leads Asian FX higher, stocks mixed on rate fears
“However, should inflation for these key commodities accelerate further, we believe the governor will not hesitate to hike further to get a hold of inflation expectations,” he added.
The Malaysian ringgit, Indonesian rupiah and the Singapore dollar eased between 0.1% and 0.2%.
Seperately, investors will also look out for a slew of speeches from U.S Federal Reserve officials throughout the week. Markets have priced in 93% chance of the Fed keeping rates unchanged later this month.
Most Asian equities were trading in the red, with stocks in Singapore , Kuala Lumpur, Seoul and Shanghai losing between 0.1% and 0.6%.
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