BENGALURU: Most emerging Asian currencies and stocks inched higher on Friday, as Treasury yields fell on signs of easing inflation, underscoring market expectations that the US central bank was done raising rates.
The South Korean won rose by 0.3%, paring earlier gains. It was on course to snap three weeks of declines.
The Malaysian ringgit and Philippine peso added 0.2% and 0.1% respectively.
The benchmark 10-year US Treasury yield declined 0.3% because of weaker-than-expected US inflation and disposable income data.
The third-quarter GDP print from the US released on Thursday showed economy was still resilient, even as easing inflationary pressures prompted hopes that the Federal Reserve would stop hiking interest rates in the short-term.
Market watchers are keenly awaiting personal consumer expenditure index data from the US, which the Fed also uses as an inflation gauge, later in the day.
The gauge is seen growing 0.3% in September on a monthly basis.
“We do not expect further broad tightening in the US on domestic factors, while central banks are more prepared to deal with a hawkish Fed,” analysts at Barclays wrote in a note.
Meanwhile, the Philippines central bank raised its benchmark interest rate by 25 basis points to 6.5% in a widely-flagged offcycle move on Thursday, while also warning that inflation remained above its target level.
The Philippine peso added 0.1%.
Stocks in Manila fell 0.9%, and were on course for their worst session since Oct. 17, 2022.
Philippines’ offcycle hike followed a surprise interest rate rise by Bank Indonesia (BI) last week, as concerns over domestic inflation and higher US interest rates nudged Asian central banks to keep raising rates.
“I think Indonesia and Philippines decided to hike rate based on concerns over resurgence of inflation which could happen if oil prices rise higher, leading to 2nd round effect on goods & services prices or inflation outlook,” Poon Panichpibool, markets strategist at Krung Thai Bank said.
“Other Asian Central Banks might not have to follow both BI and BSP as the inflation dynamic and inflation outlook could be different from what the BI and the BSP (Bangko Sentral ng Pilipinas) foresee for Indonesia and Philippines,” Panichpibool added.
The Indonesian rupiah edged 0.2% lower, while shares rose 0.7%.
Shares in Beijing and Mumbai also added 1% each, while equities in Taipei rose 0.4%.
Equities in Seoul also advanced about 0.2%, with JP Morgan analysts expecting that sluggish demand in the country will dampen any further rally in local stocks.
The Malaysian ringgit added about 0.2%, but was on track for its ninth weekly loss.
The country’s central bank is set to decide its overnight policy rate on Nov. 2.
Comments
Comments are closed.