The Philippine peso inched higher on Thursday, keeping those gains after data showed faster-than-forecast economic growth, while other Asian currencies also rose slightly against a weaker greenback.
The peso was up 0.2%. The Philippine economy grew at a stronger-than-forecast annual rate of 7.2% in the fourth quarter due to pent-up demand following the lifting of COVID-19 restrictions.
“The above-consensus GDP growth in 2022 should give the Bangko Sentral ng Pilipinas (BSP) space to tighten policy further in the first half of 2023,” said Nicholas Mapa, a senior economist with ING.
The Thai baht firmed 0.2% a day after the Bank of Thailand (BoT) lifted interest rates by 25 basis points as expected, and hinted at measured tightening ahead.
“We think that the BOT would be keen to stick with its tightening policy to ensure that medium-term inflation expectations stay anchored and be pre-emptive on upward inflation risks,” DBS economist Chua Han Teng said in a note to clients.
The Malaysian ringgit gained 0.3%.
Emerging Asian FX mixed on rate hike, recession woes; ringgit, baht gain
“China’s rapid reopening is also increasing optimism for the MYR given Malaysia’s large trade position with China,” Maybank analysts wrote.
The dollar index lolled near an eight-month low against its peers as traders await preliminary US fourth-quarter GDP figures later on Thursday as well as a slew of central bank meetings next week.
Downbeat earnings and guidance from US corporates have deepened fears of an economic downturn, leading investors to pare back expectations on how much longer the Federal Reserve will need to aggressively raise interest rates.
The Singaporean dollar rose 0.1%, while Indonesia’s rupiah firmed 0.1% and the Japanese yen advanced 0.4%.
Asian equities continued to rise, notching a fresh seven-month high with Hong Kong shares playing catch-up to other markets’ gains as trade resumed after its three-day Lunar New Holiday.
TD Securities analyst Mitul Kotecha predicts emerging market assets will outperform in the coming months due to “cheaper valuations, softer USD, peak Fed rates pricing, lower UST yields and China reopening”.
Seoul shares climbed 1% with automakers leading the gains ahead of their earnings releases, while Jakarta and Singapore stock benchmarks rose 0.3% and 0.4% respectively.
Kuala Lumpur shares slipped 0.2%, Thai shares fell 0.5% and Philippine shares were flat.
Highlights:
** South Korean consumers’ inflation expectations inched up in January, with sentiment toward economic conditions and the outlook also improving
** The Philippines posted a trade deficit of $4.6 billion for December, the biggest trade gap in three months, government data showed on Thursday
** Indonesia’s palm oil exports fell 8.5% last year because of a volatile regulatory environment and sluggish output that is expected to continue this year, the Indonesia Palm Oil Association said on Wednesday
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