Asian Currency

Asian currencies, equities drop; c.bank meetings in focus


EMERGING MARKETS-Asian currencies, equities drop; c.bank meetings in focus

BOJ ends eight years of negative interest rates

Yen slips as much as 0.9%

Seoul stocks down 1.1%

Investors focus on central bank policy meetings across regions

Updates at 0700 GMT

By Echha Jain

March 19 (Reuters)Most Asian currencies eased against the U.S. dollar on Tuesday, while equities fell, as the focus shifts towards other global central bank meetings after the Bank of Japan (BOJ) ended eight years of negative interest rates.

The MSCI International Emerging Market Currency Index .MIEM00000CUS slipped 0.2% to hit its lowest since March 1, while the MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.9% to its lowest since March 7.

The BOJ took the spotlight for the day after it decided to end its negative interest rate policy and abolished its yield control curve in a landmark shift from its huge stimulus programme. This was Japan’s first interest rate hike since 2007.

The Japanese yen JPY= slipped as much as 0.9% while stocks .N225 ended the session 0.7% higher.

“With wage growth peaking this year, we still expect inflation to fall below the BOJ’s target by the end of the year, so the Bank won’t feel the need to lift its policy rate any further,” said MarcelThieliant, head of Asia-Pacific for Capital Economics.

Amongst other equities, Seoul stocks .KS11 were the biggest laggards, falling 1.1%. Philippine stocks .PSI, on the other hand, advanced 0.4%.

In currencies, the South Korean won KRW=KFTC depreciated 0.5% against the greenback to a roughly one-month-low, while the Taiwanese dollar TWD=TP slipped 0.4% to hit its lowest since Nov. 20, 2023.

The U.S. dollar index =USD was up 0.2% at 103.82 ahead of the start of the U.S. Federal Reserve’s policy meeting, arguably the most important among the slew of central bank meetings this week, including in Taiwan , Indonesia , Turkey , Russia , Brazil and Mexico.

Most central banks are expected to hold rates steady, with the market’s attention on policymakers’ commentary and updated rate projections for the rest of the year, especially at the Fed.

Traders are pricing in a 99% certainty that the Fed will stand pat at its March meeting on Wednesday and a 55.2% chance of a rate cut in June, according to the CME FedWatch tool.

Eugene Leow, a senior rates strategist at DBS, said there is room for calibrated rate cuts in the second half of the year as the Fed gets more confident with the inflation trajectory.

“This will also set the tone for better sentiment towards EM assets. EM central banks like BI (Bank Indonesia) may also feel more confident about cutting rates,”

The Malaysian ringgit MYR= depreciated 0.3% while the Indonesian rupiah IDR= slipped 0.2%. Both hit their lowest level since March 6.

Kuala Lumpur stocks .KLSE slipped 0.3% while stocks in Jakarta .JKSE were up 0.5%.

HIGHLIGHTS:

** Taiwan c.bank chief says inflation will be above 2% this year, but lower than 2023

** Philippines foreign minister says challenge is how to sustain, elevate US-Philippines alliance

** Indonesia proposes injecting $3.7 bln into state firms in 2024, 2025, minister says

Asia stock indexes and currencies at 0700 GMT

COUNTRY

FX RIC

FX DAILY %

FX YTD %

INDEX

STOCKS DAILY %

STOCKS YTD %

Japan

JPY=

-0.82

-6.19

.N225

0.66

19.54

China

CNY=CFXS

-0.01

-1.41

.SSEC

-0.55

3.12

India

INR=IN

-0.04

+0.33

.NSEI

-1.04

0.44

Indonesia

IDR=

-0.16

-2.01

.JKSE

0.52

0.93

Malaysia

MYR=

-0.32

-2.98

.KLSE

-0.32

6.47

Philippines

PHP=

-0.36

-0.72

.PSI

0.38

6.65

S.Korea

KRW=KFTC

-0.46

-3.87

.KS11

-1.10

0.03

Singapore

SGD=

-0.21

-1.68

.STI

0.05

-2.06

Taiwan

TWD=TP

-0.41

-3.32

.TWII

-0.11

10.74

Thailand

THB=TH

-0.15

-5.14

.SETI

0.06

-2.05

Reporting by Echha Jain in Bengaluru; Editing by Lincoln Feast and Savio D’Souza



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