MANILA, July 13 (Reuters): Asia's emerging market currencies edged
MANILA, July 13 (Reuters): Asia’s emerging market currencies edged up on Wednesday, while cautious investors awaited US inflation data that could determine the pace of further policy tightening in the world’s largest economy.
Taiwan shares rebounded after plummeting to a more than one-and-a-half-year low on Tuesday, as the government announced it would activate its T$500 billion ($16.75 billion) stock stabilisation fund to intervene in the market following recent sharp falls in stock prices.
The benchmark index closed 2.7% higher in its biggest jump since mid-March.
The index is still down more than 20% this year, and along with the KOSPI in South Korea, is the worst performing stock index in the region.
In Seoul, equities rose and the won strengthened after the Bank of Korea (BoK) delivered a historic half-point interest rate hike in an expected move, as policymakers try to curb inflation that is running at the fastest pace since the bank adopted its current policy system in 1999.
“There are mounting pressures for global central banks to default to upsized rate hikes upfront in response to continued upside surprise in inflation,” Mizuho economist Vishnu Varathan said in a note.
Currencies in the region have come under immense stress in recent months, with expectations that the US Federal Reserve will hike rates faster and further than its peers contributing significantly to the safe haven dollar’s unrelenting surge.
A high US inflation print would likely be read by the Fed as a sign that they need to continue with aggressive interest rate rises, which is likely to weigh further on beaten down Asian currencies.
Risk appetite in Asia may continue to be restrained amid global growth concerns and fears of tighter financial conditions, even if there is a moderation in the US CPI (consumer price index), said Christopher Wong, senior forex strategist at Maybank.
Shares in India rose 0.2%, as a plunge in oil prices provided some respite to the country that saw unrelenting inflation in June. Data on Tuesday showed India’s annual consumer inflation remained painfully above the 7% mark, beyond the central bank’s tolerance band for a sixth month in a row, raising prospects of more rate hikes next month.
Stocks in Singapore, Malaysia and the Philippines all fell, declining between 0.6% and 1.7%. Stock market in Thailand was closed for a local holiday.- Reuters
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