BENGALURU: Emerging Asian currencies and stocks fell on Thursday as US bond yields and the dollar rose on fears of higher-for-longer interest rates, with the Philippine peso slipping as its central bank opted for an off-cycle rate hike.
The peso fell 0.3% after the central bank hiked its benchmark interest rate by 25 basis points to 6.50% on Thursday, three weeks before its scheduled meeting, in an effort to control high prices.
The Bangko Sentral ng Pilipinas (BSP) also warned that inflation would stay above its target till the middle of next year.
“With the peso on relatively stable footing and inflation being driven largely by supply-side factors, today’s off-cycle rate hike was carried out in a bid to ensure inflation expectations stay well-anchored going into 2024,” ING Bank analysts said in a note.
Meanwhile, the South Korean won slipped 0.8%. The New Taiwanese dollar and Malaysian ringgit fell 0.3% and 0.2%, respectively.
The dollar index, which measures the strength of the greenback against six major rivals, rose 0.3% to 106.796.
The 10-year US Treasury yield, which serves as a crucial economic benchmark and influences borrowing costs, also climbed after weak demand for a five-year Treasury bond auction and higher new home sales data.
The rise in US yields has prompted concerns that global central banks may not lower interest rates anytime soon.
Data showed the US economy likely grew in the third quarter at the fastest pace of any quarter in nearly two years on the back of higher wages and spending.
Khoon Goh, who heads Asia Research at ANZ Banking Group, said elevated oil prices, geopolitical unrest and an upcoming Federal Open Market Committee (FOMC) meeting could affect Asian assets and are being closely monitored by analysts.
Stocks in Thailand fell as much as 1.7% to the lowest since November 2022. Equities in India and Taiwan slid 1.2% and 1.7%, respectively. In Indonesia, stocks fell 1.5% after rising in the last two sessions, with the rupiah slipping 0.4% to 15,930 per dollar.
“Further upside risks for the rupiah could only be stemmed if it becomes clear that BI is engaging in another cycle of rate hikes,” Maybank analysts said.
Meanwhile, official advance estimates showed South Korea’s economy grew in the third quarter at the same pace as in the previous quarter, beating market expectations.
Even as economy grew in the third quarter, a soft business “survey data suggests a cloudy near-term outlook though while the Bank of Korea is set to remain hawkish,” ING Bank’s analysts wrote in a note.
Comments
Comments are closed for this article.