Asian currencies advance as China returns from holiday, shares fall

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Most Asian currencies advanced on

Monday as China’s markets resumed trade after a week-long Lunar

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New Year break, while investors looked towards key central bank

events this week, including an interest rate decision by the

U.S. Federal Reserve.

The Chinese yuan appreciated 0.6% to hit a near

two-week high, while the Taiwan dollar rose 0.7% to its

highest level since August 23 last year.

Thailand’s baht, which is among the year’s best

performing currencies in the region, firmed 0.2%. It has been

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hovering at a more than 10-month high.

Malaysia’s ringgit strengthened 0.1% and was

lingering at its highest since last April. South Korea’s won

rose 0.2%.

“Given the outlook on modest Fed hikes, we see some

potentially stronger currency movements this week against the

greenback, helped by the positive outlook on China,” analysts at

MUFG Bank said in a note.

The Fed is widely expected to hike rates by 25 basis points

(bps) on Wednesday. Market participants will be watching out for

guidance on the central bank’s future policy decisions as U.S.

inflation cools from decades-high levels.

“Fed Chair Powell is still likely to push back on market

speculation of second-half 2023 rate cuts and emphasize the need

to keep going until there are clearer signs of inflation

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softening further,” analysts at OCBC said in a note.

Most central banks in Southeast Asia are dialing back their

policy tightening, with Malaysia’s central bank unexpectedly

pausing, Indonesia signaling an early end to its cycle and Bank

of Thailand hinting at measured tightening ahead.

The Reserve Bank of India is the latest that is expected to

pause its hiking cycle after a modest rise of 25 bps at its

meeting one week after New Delhi’s Feb. 1 budget, a Reuters poll

showed.

Domestic Lunar holiday trips in China surged 74% from last

year after authorities scrapped COVID-19 travel curbs,

signaling better economic activity in Southeast Asia’s biggest

trading partner than in 2022.

Stock markets across the region were trading in negative

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territory, with Indonesia equities falling 0.5% and

Philippine stocks declining 1.3%. China’s benchmark index

and Taiwan were the only bright spots in the

region, gaining 0.7% and 3.1%, respectively.

HIGHLIGHTS:

** U.S. secures deal with Netherlands, Japan to curb exports

of some advanced chip-making machinery to China – Bloomberg

reports

** Indian equities are expected to open higher on Monday

after falling in the previous two sessions following a

short-seller attack on Adani group companies

Here are rates of Asian currencies against the dollar at

0353 GMT:

Asia stock indexes and currencies at

0352 GMT

COUNTRY FX RIC FX FX INDE STOCKS STOCKS

DAILY % YTD % X DAILY YTD %

%

Japan -0.12 +0.85 <.n2>

China EC>

India -0.18 +1.29 <.ns ei>

Indonesi -0.02 +3.88 <.jk a se>

Malaysia +0.14 +3.90 <.kl se>

Philippi -0.09 +2.09 <.ps nes i>

S.Korea 11>

Singapor -0.06 +2.01 <.st e i>

Taiwan +0.65 +1.78 <.tw ii>

Thailand +0.20 +5.55 <.se ti>

(Reporting by Upasana Singh in Bengaluru; Editing by Clarence

Fernandez)