EMERGING MARKETS-Thai baht, Philippine peso firm on inflation data; Asian stocks gain


By Riya Sharma

July 5 (Reuters)The Thai baht and Philippine peso firmed on Tuesday on bets for further interest rate hikes after data showed spikes in inflation, while most Asian equities edged higher on signs of thawing China-US tensions.

The baht THB=TH and the peso PHP= pared losses and rose 0.04% and 0.2%, respectively, while most Asian currencies were largely trading lower against a strong dollar.

Philippine consumer prices in June were 6.1% higher than a year earlier.

That inflation rate was the highest in nearly four years and cemented expectations for more interest rate rises. It also increased the prospect of the central bank acting more aggressively to temper price pressures.

The narrowing gap between Philippine and US interest rates has weighed on the peso PHP=which is trading near a 17-year low against the US dollar.

Thailand’s headline consumer price index was 7.66% higher in June than a year before. The increase was stronger than expected, driven by higher energy prices.

“The baht and peso are certainly off the lows as above-forecast core inflation may spur the central bank in Thailand to hike rates, and surging inflation numbers in the Philippines have also solidified expectations for more interest rate hikes,” said Mitul Kotecha, senior EM strategist with TD Securities.

Uneasy Asian equities got some relief from a report that US president Joe Biden was leaning towards a decision on easing tariffs on goods from China. Equities were also helped by news that Chinese vice premier Liu He had spoken to US Treasury Secretary Janet Yellen.

“If at all, tariff lifting will more likely be for the more inflation-sensitive goods, so on balance it should be positive for Asian equity markets, as it should help facilitate trade. But it comes against a backdrop where global trade is declining and Asia trade patterns are also worsening,” Kotecha added.

Stocks climbed 1.5% in Manila .psi and 1.6% in Jakarta .JKSE.

“No one believes that lowering tariffs would meaningfully lower elevated inflation that is blamed on the war-led high energy prices and supply chain disruptions. … Beijing, which has moved on to meet the new trade and geopolitical landscape challenges, will probably insist on removing all tariffs,” said Philip Wee, Senior FX Strategist at DBS Bank.

In South Korea, consumer prices were 6.0% higher in June than a year earlier. The annual rise was the fastest since 1998 and fanned expectations the central bank could deliver a 50 basis point rake hike next week.

Nonetheless, the inflation rate was not much higher than expected. Stocks in Seoul .KS11 rose as much as 1.8%, rebounding from a 20-month low, while the won KRW=KFTC slipped 0.2%.

HIGHLIGHTS:

** Indonesian 10-year benchmark yields ID10YT=RR are up 5.3 basis points at 7.325%​

** Top gainers on FTSE Bursa Malaysia Kl Index .KLSE include Petronas Dagangan Bhd PETR.KL up 1.84%, PPB Group Bhd PEPT.KL up 1.67%, and Inari Amertron Bhd INAR.KL up ​1.57%

Asia stock indexes and currencies at 0437 GMT

COUNTRY

FX RIC

FX DAILY %

FX YTD %

INDEX

STOCKS DAILY %

STOCKS YTD %

Japan

JPY=

-0.43

-15.55

.N225

+0.66

-8.56

China

CNY=CFXS

+0.08

-5.05

.SSEC

-0.19

-6.62

India

INR=IN

-0.15

-5.99

.NSEI

+0.85

-7.97

Indonesia

IDR=

-0.13

-4.90

.JKSE

+1.56

+2.45

Malaysia

MYR=

-0.07

-5.66

.KLSE

+0.06

-8.23

Philippines

PHP=

+0.02

-7.41

.psi

+1.35

-12.01

S.Korea

KRW=KFTC

-0.21

-8.54

.KS11

+1.35

-21.70

Singapore

SGD=

-0.03

-3.37

.STI

-0.53

-0.64

Taiwan

TWD=TP

-0.13

-7.03

.TWII

+0.23

-21.78

Thailand

THB=TH

-0.01

-6.41

.SETI

-0.09

-5.96

Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

Asian stock markets https://tmsnrt.rs/2zpUAr4

(Reporting by Riya Sharma in Bengaluru; Editing by Bradley Perrett)

((Riya.Sharma@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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