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Most Asian currencies were on the
back foot on Monday, with the South Korean won and Thai baht
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suffering the most losses, as a jump in crude prices globally
put the narrative back on higher inflation, stoked by OPEC+’s
output cut announcement.
The South Korean won depreciated as much as 1.5%,
to see its worst day in almost a month, while the Thai baht
also slumped about 1.2%.
The won is currently the weakest currency in emerging Asia,
having lost nearly 4% on a year-to-date basis.
Christopher Wong, a currency strategist from OCBC said the
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surge in oil prices 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.
Brent oil futures rallied after OPEC+ late on Sunday
announced further oil production cuts of around 1.16 million
barrels per day. That overshadowed market optimism of a softer
reading of core inflation from the U.S. on Friday.
A jump in oil prices usually results in a selloff in riskier
assets since it becomes more expensive for net oil importers to
buy crude, pushing up price pressures in countries with a large
dependence on oil.
“The OPEC+ cut reflected the organisation’s bearish view on
crude oil demand after the banking turmoil and could pressure
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the Fed to extend its rate hike cycle to anchor inflation
expectation,” said Ken Cheung Kin Tai, Chief Asian FX Strategist
from Mizuho Bank.
The Malaysian ringgit, Philippines peso and
the Singapore dollar fell between 0.2% and 0.5%
Separately, the safe-haven dollar received a boost as market
players adjusted their expectations for the possibility of
further rate hikes.
The dollar index, which measures the strength of the
greenback against six major currencies was at 103.00 by 0625
GMT.
Weaker factory activity data from Asia added to the woes in
Asian markets as soft overseas demand hurt output, pointing to a
deteriorating global economic outlook.
Inflation in Indonesia cooled to its lowest in seven months
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in March, as prices rose slower than usual.
However, equities in Asia traded positively, with stocks in
Singapore and Malaysia gaining about 0.6% and
0.3%.
Other indices in Indonesia and the Philippines
rose more than 0.2% each, though shares in Bangkok
and Seoul shed 0.7% and 0.3%.
Markets in Taiwan were closed for a public holiday.
HIGHLIGHTS:
** Indonesian 10-year benchmark yields fall to 6.787%
** Malaysia open to talks with Beijing over dispute in South
China Sea – PM
** Indian shares little changed amid oil-linked inflation
concerns
Asia stock indexes and currencies at
0625 GMT
COUNTRY FX RIC FX FX YTD INDEX STOCKS STOCKS
DAILY % % DAILY YTD %
%
Japan -0.59 -1.85 <.n22>
China
India -0.29 +0.39 <.nse i>
Indonesi +0.00 +3.84 <.jks a e>
Malaysia -0.23 -0.45 <.kls e>
Philippi -0.65 +1.92 <.psi nes>
S.Korea
Singapor -0.21 +0.48 <.sti e>
Taiwan – +0.83 <.twi i>
Thailand -1.07 +0.44 <.set i>
(Reporting by Archishma Iyer in Bengaluru; Editing by Janane
Venkatraman)
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