Asian Currency

Asian currencies fall, yields up on revised Fed rate cut expectations -February 05, 2024 at 12:30 am EST


* Malaysian ringgit falls to a 3-month low
* Regional bond yields jump
* Thai inflation at lowest in nearly 3 years
* Indonesia 2023 GDP growth slows slightly

By Himanshi Akhand
       Feb 5 (Reuters) - Malaysia's ringgit and South Korea's
won led losses among Asian currencies on Monday while regional
bond yields rose as investors adjusted their expectations for
the Federal Reserve's policy easing after strong U.S. jobs data
last week. 
    The ringgit fell nearly 1% to a three-month low. The
won and the Philippine peso retreated 0.9% and
0.6%, respectively.
    Data on Friday showed U.S. job growth accelerated in January
and wages increased by the most in nearly two years, indicating
persistent strength in the labour market, and prompting
investors to revise their rate-cut expectations. 
    "The Fed historically tends to make rate cut decisions based
on labour market indicators. The strong NFP (non-farm payrolls)
should therefore give the Fed added comfort in staying their
hand on cutting rates," Maybank analysts wrote.
    Traders are now pricing in just a 20% chance that the Fed
could begin easing rates in March, according to the CME FedWatch
tool.
    The strong payrolls report and Fed Chair Powell's comments
that the central bank can be "prudent" in deciding when to cut
its benchmark interest rate caused the dollar to bounce and
pushed U.S. Treasury yields higher.
    Two-year yields jumped eight basis points to
4.451% in early Asia trade, while Ten-year yields
rose four basis points to 4.07%. Yields rise when bond prices
fall.
    Regional bond yields took the cue and were higher on Monday,
with yields on South Korea's 10-year Treasury bond
rising 11 basis points and Singapore's 10-year benchmark yield
 up 9.4 basis points.
    Meanwhile, data showed that Indonesia's annual economic
growth fell slightly, but remained solid at 5.05% last year,
close to the government's latest outlook of 5% and slightly
below the 5.3% recorded in 2022.
    The rupiah was last down 0.2%.
    Bank Indonesia governor said last week that the central bank
has room to lower interest rates this year to lift economic
growth, but is waiting for the rupiah to strengthen against the
dollar. The currency has fallen nearly 2% so far this year.
    In Thailand, data showed headline CPI dropped to its lowest
in 35 months in January. The baht followed regional
peers to decline 0.5%.
    The Bank of Thailand is set to keep its key interest rate
unchanged this week, and leave it there until early 2025,
according to a Reuters poll.
    The decision will be closely watched given the recent
political pressures on the central bank to cut rates at a time
when inflation has been in negative territory for the last three
months.
    Reserve Bank of India's rate decision, and inflation data
from the Philippines, Taiwan and China will also be on
investor's radar this week, while concern over China's economy
and markets remaining in limelight.
    
    
HIGHLIGHTS
    ** Indonesia presidential hopefuls strike conciliatory note
ahead of election
    ** China's Jan services activity expands at slower pace -
Caixin PMI
    ** South Korea watchdog warns financial firms on risk
management 
    
    
  Asia stock indexes and currencies                        
 at 0430 GMT                                         
 COUNTRY   FX RIC          FX     FX  INDEX  STOCKS  STOCKS
                      DAILY %  YTD %          DAILY   YTD %
                                                  %  
 Japan                  +0.04  -4.89  <.N22   0.52    8.61
                                      5>             
 China                               C>             
 India                  -0.13  +0.22  <.NSE    0.22    0.78
                                      I>             
 Indonesi               -0.22  -1.88  <.JKS   -0.25   -0.72
 a                                    E>             
 Malaysia               -0.82  -3.45  <.KLS   -0.11    4.14
                                      E>             
 Philippi               -0.59  -1.51  <.PSI    0.60    4.62
 nes                                  >              
 S.Korea                             1>             
 Singapor               -0.15  -1.85  <.STI   -1.66   -3.50
 e                                    >              
 Taiwan                 -0.42  -2.04  <.TWI    0.22    0.94
                                      I>             
 Thailand               -0.45  -4.30  <.SET    0.10   -2.15
                                      I>             
   

    
 (Reporting by Himanshi Akhand in Bengaluru; editing by Miral
Fahmy)
  



Source link

Leave a Response