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Most Asian currencies fell further into the red on Monday, as China’s reimposition of a lockdown in Shanghai weighed on regional sentiment and overshadowed hopeful signs of progress in peace talks between Russia and Ukraine.

Shanghai, China’s financial hub, went into a lockdown on Sunday as authorities ordered a two-phased shutdown, with firms and factories to suspend manufacturing, or work remotely during the nine-day period in order to carry out COVID-19 testing.

Yeap Jun Rong, a market strategist at IG Markets, however, noted that Shanghai’s port, the busiest in the world, will remain operational, which may mitigate some of the impact of supply chain disruptions.

The yuan retreated 0.1%, while the Thai baht and Philippine peso shed about 0.6% and 0.4% respectively.

Chinese stocks were off 0.1% in a volatile session so far.

Data also showed that profits of China’s industrial firms grew in the first two months of the year, driven by the energy and raw materials sectors.

The US dollar was supported by the Federal Reserve’s hawkish stance and expectations for several rate hikes during the year, further weighing on emerging currencies.

Asia FX bears remain firm as risks from geopolitics, inflation persist

On the geopolitical front, there were some hopes of progress in Russian-Ukranian peace talks to be held in Turkey this week after President Volodymyr Zelenskiy said Ukraine was prepared to discuss adopting a neutral status as part of a deal.

Equities in the region were mixed, with Singaporean stocks 0.4% higher, while Philippine and Indian stocks sunk about 0.4% and 0.7% each.

Stocks in Singapore rose to over a one-month high as the city-state lifts COVID-19 curbs this week amid its shift towards a “living with the virus” approach which will see it allow quarantine-free entry for vaccinated travelers from April 1.

Its benchmark bond yield was also at an over three-year high of 2.414%.

Thailand’s main stock index rose 0.1%, while Indonesia’s rose 0.4%.

The Bank of Thailand will meet on Wednesday, where markets expect it to maintain interest rates, with median forecasts showing no change until the second quarter of next year.

Highlights:

** Sinopec rises 2.9% after unveiling its highest ever capital expenditure investment, after booking its highest profit in a decade

** Indonesia bond yields down 4 basis points to 6.701%

** Japan’s yen plunges 0.8% as central bank keeps bond yields subdued

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