Asian FX, stocks rise as strong U.S. GDP data aids risk sentiment

THE Philippine peso and Malaysia's ringgit led gains among Asian currencies on Friday as data overnight showed resilience in the U.S. economy, boosting investor risk appetite, while equities hit a nine-month high.

Both the peso and the ringgit have rallied in the first three weeks of January, with the latter rising nearly 4% year-to-date, just behind the top-performing Thai baht.

The peso rose up to 0.4%, hitting its highest point since June 22 after data a day earlier showed Manila's economy ended 2022 with the fastest growth in more than four decades underpinned by a robust final quarter.

The ringgit was up as much as 0.4%, its highest since April 14, as China's reopening measures boosted prospects for the tourism-reliant nation, further helped by an uptick in crude oil prices.

Asian currencies have outperformed so far in 2023, propelled by an optimism from China's reopening of its borders and renewed focus on boosting its sagging economy, and diminished strength in the greenback.

"The rebuild in FX reserves bolsters the constructive outlook on Asia FX amid the China reopening story, but we are hesitant to chase it as a lot is in the price," TD Securities analysts said in a note.

"As such, a more benign inflation trajectory should spell the end of Asia central banks' tightening cycles given the rapid increase in policy rates over 2022."

More central banks in Asia dialled back their policy-tightening narrative last week, with the Malaysian central bank unexpectedly pausing and Indonesia signalling an early end to its cycle.

The dollar index - which measures the currency against six major peers, fell against the Japanese yen.

The baht, which has emerged as a top beneficiary of China's abrupt dismantling of its COVID curbs, slipped 0.3% on Friday and was set to snap a five-week winning streak.

Indonesia's rupiah fell 0.2%, after making strong gains earlier in the week, but was eyeing a third straight week of gains.

South Korea's won was down 0.1% while the Singapore dollar fell 0.2%.

Meanwhile, the Pakistani rupee slumped 9.6% against the dollar on Thursday, the biggest one-day drop in more than two decades, worsening the trouble for the cash-strapped South Asian nation.

Asian shares were poised for their fifth straight week of gains after strong GDP data out of the U.S. economy that soothed concerns of a recession.

OCBC analysts said "optimism that the U.S. Fed may be able to engineer a soft landing," will aid sentiments in Asian markets.

MSCI's broadest index of Asia-Pacific shares outside Japan rose as much as 0.55% to hit an almost nine-month high.

Jakarta stocks rose nearly 1%, to its highest since December 28, Seoul shares gained 0.6% while those in Thailand and Singapore rose 0.4% each.

Indian stocks dropped nearly 1% dragged by financials on risk aversion due to Hindenburg's report on the books of Adani group companies.


** Pakistan's generators produced more power than was required on Monday, causing voltage fluctuations that culminated in a system collapse that plunged 220 million people into darkness, an internal government document reviewed by Reuters showed

** India's Adani Enterprises Ltd began a record $2.45 billion secondary share sale for retail investors on Friday, as a heavy selloff in Adani group companies intensified after an attack by a U.S.-based short seller - Reuters

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