Asian currencies, stocks rise on hopes of slowdown in Fed hikes, China reopening

Thailand’s baht and South Korea’s won led gains among strengthening Asian emerging currencies on Monday as investors scaled back bets for US Federal Reserve rate hikes, while reopening of China’s borders further lifted risk sentiment.

The baht gained 0.9%, while Thai stocks rose as much as 1%, both touching their highest levels since April 2022.

“Given tourist receipts from China in Thailand accounted for more than 3% of Thailand’s GDP in 2019, highest in Southeast Asia, we expect Thailand to be the main beneficiary of China’s reopening,” analysts at OCBC wrote.

Beijing has now opened borders that had been all but shut since the start of the pandemic, dismantling a final pillar of a zero-COVID policy and allowing a surge in traffic across the nation.

The yuan jumped to a near five-month high against the dollar.

Meanwhile, Khoon Goh, head of Asia research at ANZ, said that, along with ongoing optimism around China’s reopening, weakness in the US dollar had provided a further kick to investor sentiment and had contributed to a rally in risk assets.

The US dollar was steady and the market dialled back bets on Fed rate hikes after data on Friday showed a jump in the US workforce and easing wage growth, combined with a sharp fall in service-sector activity.

Across the region, currencies strengthened, with the South Korean won gaining 1.9% to hit its highest level since early June.

Indonesia’s rupiah added 0.4%, while Malaysia’s ringgit and the Philippines’ peso strengthened 0.7%.

Major regional stock indexes were also higher. Equities in the Philippines, India and Malaysia rose between 0.5% and 1.4%.

Elsewhere, analysts warned of more volatility in Brazil’s financial markets following the arrest of supporters of far-right former President Jair Bolsonaro after they invaded the country’s Congress, presidential palace and Supreme Court.

Thai baht at 7 month high on tourism prospects, Fed minutes in focus

The Brazilian real, among the top performing emerging currencies in 2022, had yet to trade on Monday, after being under pressure earlier last week on concerns about the country’s fiscal health.

Highlights

• Top gainers on Thailand’s SETI include Muangthai Capital PCL and Srisawad Corporation PCL

• Thailand’s three-year yield is down 1 basis point at 1.69%

• Indonesia’s 10-year benchmark yield is down 8.1 basis points at 6.885%