Asian currencies stumble on higher crude prices

Article content

Most Asian currencies fell on

Monday, with the South Korean won suffering the biggest drop

Article content

after the Organization of the Petroleum Exporting Countries

announced a surprise cut in oil output that stoked fears about

persistent inflation.

The South Korean won slumped as much as 1.5%, its

worst day in about a month. The currency is emerging Asia’s

weakest, having lost more than 4% on a year-to-date basis.

Brent oil futures rallied in early trade after OPEC+

announced late on Sunday further oil production cuts of around

Article content

1.16 million barrels per day. That overshadowed market optimism

over a softer reading of core inflation from the United States

on Friday.

A jump in oil prices usually results in a sell-off in

riskier assets since it becomes more expensive for net oil

importers to buy crude, thereby pushing up price pressures in

countries with a large dependence on oil.

“The surge in oil prices due to a surprise production cut is

a fresh risk to inflation and could potentially pose more

downward pressure to sentiment-proxy, net importer Asian

currencies, including the South Korean won and the Thai baht in

the near term,” Christopher Wong, a currency strategist with

OCBC said.

The Thai baht, Malaysian ringgit, Philippine

peso and the Singapore dollar were hard hit by

Article content

Article content

elevated crude prices, depreciating between 0.3% and 1%.

Following the jump in crude prices, markets raised their

expectations for the probability of further rate hikes, which

provided a boost to the safe-haven U.S. dollar.

The dollar index, which measures the strength of the

greenback against six major currencies, was at 103.009 by 0335

GMT.

Markets are also keeping a close eye on U.S. non-farm

payrolls data due later this week for the outlook on interest

rates.

Elsewhere, China’s factory activity growth slowed in March,

falling below forecasts due to weaker demand while South Korean

factory activity also shrank, adding to pressure on Asian

currencies.

However, equities in Asia were on the front foot for the

Article content

day, with stocks in Singapore and Malaysia

gaining about 0.7% and 04%.

Other indices in Indonesia and the Philippines

rose more than 0.2% each, though shares in Bangkok

and South Korea shed 0.3% and 0.1%.

Markets in Taiwan were closed for a public holiday.

HIGHLIGHTS:

** Indonesian 10-year benchmark yields fall to 6.780%

** South Korea March factory activity contracts at sharpest

pace in six months – PMI

** EXCLUSIVE-India regulator probing some Adani offshore

deals for possible rule violations-sources

Asia stock indexes and currencies at

0335 GMT

COUNTRY FX RIC FX DAILY FX YTD % INDEX STOCKS STOCKS

% DAILY % YTD %

Japan -0.44 -1.70 <.n225>

China >

India >

Indonesi +0.00 +3.84 <.jkse a>

Malaysia -0.23 -0.45 <.klse>

Philippi -0.48 +2.09 0.21 -0.81

nes

S.Korea >

Singapor -0.26 +0.43 0.78 1.02

e

Taiwan >

Thailand >

(Reporting by Archishma Iyer in Bengaluru; Editing by

Jacqueline Wong)