Most Asian currencies subdued, Indonesian rupiah on back foot

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Asian emerging currencies were subdued on

Tuesday as recession concerns curbed risk taking and buoyed the

dollar, while the Indonesian rupiah fell ahead of a central bank

policy meeting.

Bank Indonesia (BI), one of a few major Asian central banks

that has yet to begin monetary policy tightening, is expected to

leave rates unchanged at record lows on Tuesday.

“Plans to increase the cost of subsidized fuel have been

floated around and should this be implemented, we believe it

could be a trigger for BI to finally raise rates by the end of

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3Q22,” analysts at ING said in a note.

The country has tripled its subsidy budget this year to keep

prices of gasoline, diesel and some power tariffs unchanged. The

huge subsidy bill has helped keep inflation relatively

low.

Indonesia’s rupiah, which has fallen 4.5% so far this

year, weakened 0.1% to hit its lowest in two weeks.

Concerns over global growth persisted on an aggressive U.S.

Federal Reserve policy view and after a renewed spike in

European energy prices stoked recession fears.

The dollar index firmed 0.1% bolstered by the growing

possibility of a hawkish message from the Fed’s Jackson Hole

symposium later week.

The Singapore dollar was 0.1% firmer and the

benchmark index 0.6% lower after the city-state’s key

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consumer price gauge rose 4.8% in July, its fastest pace in more

than 13 years.

A Reuters poll estimated July core inflation of 4.7%

year-on-year.

The country’s core and headline inflation figures will

provide further cues to the Monetary Authority of Singapore’s

(MAS) stance on tightening policy.

“The lack of any signs of inflation peaking thus far may keep

the MAS’ tightening stance intact as we inch closer to the

October meeting,” Yeap Jun Rong, a market strategist at IG said

in a note.

Crude prices slid overnight and weighed on Malaysia, a net

exporter of oil. The ringgit pared earlier losses and was

flat around 0448 GMT, while equities in Kuala Lumpur

declined 0.5%.

Among other Southeast Asian currencies, Thailand’s baht

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fell 0.3%, its lowest in more than two weeks.

South Korea’s won fell 0.1%, its weakest since

April 2009. Stocks in Seoul dropped 0.9% and were on

track for their longest losing streak in two months.

All but one of 36 economists polled by Reuters forecast the

Bank of Korea will raise its policy rate by 25 basis point (bps)

at its meeting on Thursday. One expected a 50 bps hike.

HIGHLIGHTS:

** India’s benchmark 10-year yields rise 3.5 points to

7.305%

** Malaysia’s exports of palm oil products for August 1 to

August 20 fell 0.8%

The following table shows rates for Asian currencies against the

dollar at 0448 GMT.

COUNTRY FX RIC FX FX INDEX STOCK STOCKS

DAILY YTD % S YTD %

% DAILY

%

Japan +0.16 -16.1 -1.18 -1.17

5

China

India

Indonesia -0.10 -4.36 0.77 8.83

Malaysia -0.04 -7.16 -0.53 -5.61

Philippines +0.02 -9.25 -1.64 -7.42

S.Korea 6

Singapore +0.06 -3.44 -0.60 3.82

Taiwan

Thailand

(Reporting by Upasana Singh in Bengaluru; Editing by Jacqueline

Wong)