Asian FX resists strong dollar, stocks are nervous

  • Thai stocks hit a high for more than 2 months
  • Singapore posts better than expected third quarter GDP
  • Bank of Korea rate decision expected on Thursday

Nov. 24 (Reuters) – Emerging market currencies in Asia were broadly subdued on Wednesday as regional assets remained resilient, even as bets on the U.S. rate hike continued to push the dollar higher after the dollar rolled over. Federal Reserve Chairman Jerome Powell.

As the Thai baht fell 0.8% to its lowest level since Nov. 5, the yuan, Philippine peso and Taiwanese dollar traded up 0.1%.

“The pressure on Asian currencies is much more limited than you would expect given the dollar rebound,” said Mitul Kotecha, EM strategist at TD Securities.

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“One of the reasons Asian currencies have been well supported is the anchor provided by the yuan.”

The yuan has remained firm in recent sessions as continued seasonal business demand for the currency outpaced the dollar’s overall strength and an official policy rate lower than expected.

The region’s currencies were also largely immune to a more than 15% drop in the Turkish lira on Tuesday after President Tayyip Erdogan defended the recent rate cuts, despite widespread criticism and calls to reverse the trend. Read more

Analysts said fears of contagion in Asian currencies due to the sharp drop in the Turkish currency are limited, given the reduced exposure of investors after years of erratic politics.

Meanwhile, Thailand’s finance minister said the country’s monetary policy must remain accommodative to support fiscal policy. Read more

The baht, which is the region’s worst performing currency this year, fell further, while stocks (.SETI) rose 0.7% to their highest since September 19.

Shares in the wider region were nervous as traders reacted to increased U.S. Treasury yields and new restrictions to contain the increase in COVID-19 cases in Europe.

Shares of the Philippines (.PSI) and Taiwan (.TWII) fell 0.1% and 0.3%, respectively, while shares of India (.NSEI) and Singapore (.STI) fell. increase.

Singapore’s gross domestic product rose 7.1 percent year-on-year in the third quarter, the Commerce and Industry Ministry said, above the 6.5 percent growth seen in the government’s prior estimate. Read more

The city-state’s economy is expected to grow by around 7% in 2021, at the top of the official forecast range. However, the government has warned that the economy will grow at a slower pace next year as an uneven recovery continues across all sectors.

South Korean stocks (.KS11) fell 0.4% and the won traded flat, a day before the country’s central bank decision on the exchange rate.

Reuters poll found that the Bank of Korea will raise interest rates and continue a tightening cycle until next year as it tries to curb rising inflation and soaring house prices which force households to take on more and more debt. Read more

STRONG POINTS

** Salee Printing PCL (SLP.BK), down 5.88%, is the loser of the Thai SETI (.SETI)

** Indonesian benchmark 10-year yields down 0.3 basis point to 6.174%

** Investors await the minutes of the Fed’s November policy committee meeting, which will be released later on World Day

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Reporting by Harish Sridharan in Bangalore; Editing by Simon Cameron-Moore

Our Standards: The Thomson Reuters Trust Principles.

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