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Most Asian currencies were mixed against a volatile dollar on Friday as investors digested a red-hot U.S inflation print, while the Singapore dollar jumped after authorities tightened monetary policy and reported better-than-expected economic growth.

U.S consumer prices increased more than expected in September and underlying inflation pressures continued to build, reinforcing expectations that the Federal Reserve will deliver a fourth 75-basis point interest rate hike next month, with some bets on a full percentage point hike.

Meanwhile, most Asian equities climbed, as they tracked their US peers on Wall Street, with South Korea, Philippines and Taiwan gaining in the range of 0.9% and 2.9%.

Wall Street had a choppy session overnight, rebounding unexpectedly after an initial sell-off on the inflation data, with the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite adding between 2.2% and 2.8%.

“An initial move lower for major US indices on hotter-than-expected inflation data was massively overturned as the extreme bearish positioning heading into the consumer price index print may drive dip buyers to challenge the availability in supply of new sellers,” Yeap Jun Rong, a market strategist from IG Markets wrote.

Among currencies, the Singapore dollar gained the most, firming about 0.6% after its central bank tightened monetary policy as expected for the fourth time this year to combat inflation.

Asian currencies gain on weak dollar, renewed risk appetite

“The USD/SGD has seen a sharp move lower on the more persistent inflation forecast, seemingly moving to retest a double top formation,” Rong added.

Additionally, the island nation reported stronger economic growth for the third quarter, which capped risks of falling into a recession, in the face of elevated price pressures.

The Singapore dollar has been one of the better performing currencies of the year, despite falling about 5% against the greenback, while most of its other Asian counterparts have recorded double-digit losses.

Other units like the Philippines Peso, South Korean won and the Indian rupee rose between 0.1% and 0.4%.

However, the Malaysian ringgit remained to be one of the outliers in the basket of currencies, falling about 0.1%.

The currency has come under pressure for four straight days, in the face of political uncertainty after the country’s parliament was dissolved earlier, paving way for a new election.

The election date has yet to be announced.

The Indonesian rupiah also fell about 0.2%.

The Chinese yuan dropped about 0.1%, after data showed consumer inflation in September quickened to the fastest pace since April 2020.

Markets in Thailand were closed for a public holiday.

Highlights:

** Indonesian 10-year benchmark yields fall to 7.321%

** IMF urges most Asian central banks to tighten policy further

** North Korea fires missile, flies warplanes near border as South imposes sanctions

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