Emerging markets - Asian currencies slip, stocks fall as Fed rate cut bets shift


JAKARTA (Reuters): Most South-East Asian markets were subdued on Tuesday as rising tensions in the Middle East and a potential delay in interest rate cuts by the US Federal Reserve kept the dollar buoyant, triggering an aversion to riskier emerging market assets.

The South Korean won, the Philippine peso, and the Malaysian ringgit eased the most, falling between 0.2% and 0.7% by 0628 GMT.

Stocks in Singapore, Taiwan and the Philippines lost more than 1% each.

Market bets on near-term interest rate cuts by the Fed declined after data last week showed US consumer prices increased more than expected in March.

The Fed's shift to hawkish rhetoric in the March meeting minutes led investors to price in a rate cut in September rather than in June.

That pushed the US dollar nearly 2% higher last week, with the dollar index - a measure of the greenback against six major rivals - currently hovering around Friday's high at 105.880.

In Asia, the Philippine peso hit its lowest level since Nov. 2, with the country's inflation basket likely to be the most sensitive to the recent spike in oil prices, according to analysts at Barclays.

"Higher oil prices are generally negative for economic activity in the region, but our estimates suggest a USD10/bbl increase in Brent only reduces GDP growth by a relatively modest 0.1-0.2 percentage points for most of Emerging Asia," the Barclays note said.

In Malaysia, the ringgit stood at a nearly two-month low, although the country stands out as the only net oil and gas exporter among the major emerging Asian economies and could be a beneficiary of higher oil prices.

Equities in Kuala Lumpur slipped 0.5%. Statements from Bank Negara Malaysia earlier in the day highlighted its efforts to ensure stability in the country's financial markets, with ongoing initiatives expected to bring in flows and liquidity into the foreign exchange market.

In India - another net importer of oil - the rupee was largely range-bound with rising oil prices expected to further pressure the currency. Stocks in Mumbai slipped 0.8%.

Investors now keenly await the country's wholesale price index (WPI) data for March due later in the day. China's yuan traded flat while stocks in Shanghai were last up 0.6%.

The Chinese central bank kept a key policy interest rate steady as widely expected on Monday when rolling over maturing medium-term loans.

Investor focus now shifts to first-quarter gross domestic product data due on Tuesday for more information on the status of a recovery in the world's second-largest economy and South-East Asia's biggest trading partner.

In Vietnam, the dong depreciated as much as 0.34% to 25,100 per dollar, its lowest level on record amid political uncertainty and leadership changes that shook the South-East Asian nation. - Reuters

Follow us on our official WhatsApp channel for breaking news alerts and key updates!
   

Next In Aseanplus News

Marcos tells public to stay vigilant, prioritise safety amid storm Aghon
Chinese firms seek dumping probe for EU pork: Global Times
Cambodia celebrates royal ploughing ceremony in western province
SQ321 flight turbulence may leave survivors with trauma; recovery may take months or years: Experts
Myanmar aims to earn over US$800mil from aquatic exports
Indonesia increases vigilance following spike in Covid-19 cases in Singapore
Srettha confident of making his case before Constitutional Court
US, China lock horns in renewed debate over Taiwan’s UN status
Plane involved in SQ321 incident returns to Singapore
Govt has picked new EC chairman, says PM

Others Also Read