Asian FX fall on growth fears, ringgit slumps

Article content

Most Asian currencies weakened on

Tuesday, with the Indonesian rupiah hit by recession concerns

Article content

while the Malaysian ringgit slumped to a new 24-year low after

the parliament was dissolved for snap elections.

Investors fear the ongoing monetary tightening cycle in the

United States and other major economies, the fastest pace of

tightening in several decades, may end up tipping the global

economy into a recession.

Bond yields rose for the fourth straight session in

Indonesia, with yields last seen at 7.296%. The

Article content

rupiah lost 0.3%.

Malaysia’s ringgit dropped as much as 0.5% to trade

at 4.670 to the dollar, its lowest since January 1998. Stocks in

Malaysia also dropped as much as 1.6% to their weakest

since May 2020.

The country’s prime minister Ismail Sabri Yaakob announced

on Monday the dissolution of parliament, paving the way for an

early election to be held, aiming to win a stronger public

mandate.

“A strong mandate would be helpful, but the MYR will

ultimately depend on the priorities of the new government,” said

Wei-Liang Chang, an FX and credit strategist at DBS.

“Markets will want to see increased fiscal consolidation,

more pro-growth policies, on top of a greater openness to trade

and investment.”

The election is to be held within 60 days of dissolution of

Article content

parliament. Analysts at Maybank said this period would likely

see the currency remaining under pressure, not helped in the

least by buoyant U.S. Treasury yields and the global growth

slowdown.

The South Korean won traded about 1.8% lower at

1,437.3 to the dollar, while the country’s main stock index

trended 2.2% lower. Korean markets returned from a

holiday on Monday and were catching up on the day’s sell-off.

Broader sentiment across the region was also negative, with

the Thai baht and Singapore dollar weakening

0.5% and 0.2%, respectively, bogged down by persistent concerns

over global growth and fears of a recession.

The Philippines’ trade deficit for August came in at a

record $6 billion, with imports rising 26%, compared with an ING

Article content

estimate of 22%. The peso, however, was broadly

unchanged.

Markets also await U.S. inflation data due late on Thursday.

Analysts expect headline inflation to have pulled back slightly

in September.

China’s yuan fell 0.5% against the dollar amid

U.S. restrictions aimed at stifling China’s semiconductor

industry and repeated COVID-19 restrictions clouding the outlook

for its economic growth.

U.S. stocks fell on Monday, with the negative sentiment

broadly tied to chipmaker stocks and global growth worries.

“Smaller falls in the U.S. equity market yesterday suggest

the selling momentum may be running out of steam again,”

analysts at ING said.

Stock markets in Asia were mixed, with major stock indices

in the Philippines and China rising 1% and 0.4%,

Article content

respectively, while those in Taiwan and Thailand

fell 3.9% and 0.4%, respectively.

HIGHLIGHTS:

** Indonesia retail sales in August rise 4.9%

Asia stock indexes and currencies at

0354 GMT

COUNTRY FX RIC FX FX YTD INDEX STOCKS STOCKS

DAILY % DAILY YTD %

% %

Japan -0.02 -21.02 -2.36 -8.05

China -0.51 -11.62 0.40 -17.96

India -0.08 -9.77 0.09 -0.56

Indonesia -0.36 -7.26 -0.05 6.22

Malaysia -0.47 -10.84 -1.33 -11.50

Philippines +0.02 -13.56 1.00 -17.30

S.Korea -1.56 -17.15 -2.16 -26.63

Singapore -0.19 -6.33 -0.03 -0.55

Taiwan -0.68 -13.16 -3.91 -27.73

Thailand -0.52 -12.45 -0.40 -5.63

(Reporting by Harshita Swaminathan, Additional reporting by

Jaskiran Singh; Editing by Jacqueline Wong)