Asian FX in cautious mood, Vietnam’s dong falls on effective devaluation

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Most emerging Asian currencies traded

cautiously on Monday, with Vietnam’s dong stumbling after an

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effective devaluation, while investors braced for more U.S. rate

hikes that will raise risks of a global recession.

The State Bank of Vietnam (SBV) effectively devalued the

dong currency by widening the exchange rate trading band to 5.0%

from 3.0% on Monday, following a sharp fall in the currency on

global market jitters.

The dong fell 0.66% to a record low of 24,270 per

dollar on Monday at 0418 GMT.

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Global sentiment took a fresh hit as a deteriorating

inflation outlook kept investors worried about recession as the

U.S. Federal Reserve stays on its aggressive rate hike

path.

Markets are now fully expecting the Fed to hike rates by 75

basis points (bp) next month, and likely by the same again in

December.

Investors also kept a nervous eye on UK bonds now that the

Bank of England’s (BoE’s) emergency buying spree is over.

“While the market was quick to price 66 bp for December

following the hot CPI print, the continued destabilization of

the 10-year will remain a significant headwind to risk,” said

Stephen Innes, managing partner at SPI Asset Management.

“That headwind will likely get worse before it gets better

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this week as the BoE steps back from bond buying.”

The Chinese yuan saw a marginal 0.1% fall,

hitting its lowest in nearly three weeks.

“Of note, the absence of a shift from COVID-zero strategy

could also weigh on the yuan and regional currencies,” analysts

at Maybank said in a research note.

In China, the week-long Communist Party Congress which began

on Sunday is expected to grant a third term to President Xi

Jinping.

Key economic data on China’s third quarter real GDP and

September’s industrial data are due on Tuesday. The data is

expected to underline the intensifying challenges at home and

abroad for the world’s second-largest economy, a Reuters poll

showed.

Elsewhere in Asia, the South Korean won

depreciated 0.6%, while the Taiwanese dollar weakened

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0.4%, leading the falls for the day.

Additionally, the Singapore dollar and Philippine

peso remained largely flat.

Singapore recorded a 3.1% rise in its non-oil domestic

exports in September which was slower compared with last month

and missed forecasts due to declines in shipments for the

Chinese and Hong Kong markets.

The Malaysian ringgit weakened 0.3%, hitting its

lowest since 1998 while the Indonesian rupiah fell 0.3%.

Malaysia is scheduled to report its September CPI inflation

numbers later in the week.

Equities across emerging Asian markets fell between 0.1% to

2.3%, while markets in the Philippines and Malaysia

remained the only outliers, gaining over 1% and 0.2%,

respectively.

Asia stock indexes and

currencies at 0503 GMT

COUNTRY FX RIC FX FX INDE STOCK STOCK

DAILY YTD % X S S YTD

% DAILY %

%

Japan +0.00 -22.6 <.n2>

China 4 EC> 9

India -0.05 -9.78 <.ns ei>

Indones -0.36 -7.95 <.jk ia se>

Malaysi -0.32 -11.6 <.kl a se> 3

Philipp +0.00 -13.5 <.ps ines i> 6

S.Korea 1 11> 6

Singapo -0.01 -5.42 <.st re i>

Taiwan -0.35 -13.4 <.tw ii> 7

Thailan -0.17 -12.6 <.se d ti>

(Reporting by Jaskiran Singh in Bengaluru; Editing by

Jacqueline Wong)