Emerging markets - Philippines inflation soars as Asian forex decline on dollar strength


MANILA, Dec 6 (Reuters): Asian emerging stocks and currencies were trading lower on Tuesday, hit by regional inflation, extended U.S. Federal Reserve rate-hike worries and a firm dollar.

Annual inflation in the Philippines rose 8.0% in November from a year earlier, bolstering the case for a half-percentage point interest rate hike this month.

"Given the elevated inflation, especially rising pressure from core services inflation, we continue to expect the BSP (Bangko Sentral ng Pilipinas) to deliver a 50 basis points hike in its December meeting," analysts at Goldman Sachs said.

Phillipines' central bank has raised rates six times this year to meet its annual inflation target of 2%-4%. Last week, its governor flagged another 25 bps or 50 bps hike at the Dec. 15 meeting.

The peso, which has lost about 9% so far this year, was flat among broadly lower Asian emerging currencies. Stocks in Manila soared 2.6%.

The dollar index rose 0.2% to 105.42 after strong US services data strengthened the greenback and fuelled bets over the Federal Reserve maintaining its higher for longer stance on further interest rate hikes.

Uncertainty over the Fed's intentions overshadowed optimism about China beginning to relax its zero-COVID strategy and sapped sentiment for risky Asian assets.

Poon Panichpibool, a markets strategist at Krung Thai Bank, said the U.S. dollar could peak over the medium-to-long-term, helping Asian currencies outperform the dollar next year.

South Korea's won and Indonesia's rupiah depreciated 1.8% and 0.7%, respectively, while India's rupee fell 0.6%. Malaysia's ringgit retreated 0.3%. Thailand's baht depreciated 0.9%, while stocks in Bangkok shed 0.4%.

The Singapore dollar appreciated 0.1% - the only bright spot among Asian emerging currencies.

Equity markets in Asia remained on the backfoot, with stocks in Jakarta and Mumbai declining 1.4% and 0.4%, respectively. - Reuters

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