EMERGING MARKETS-Philippine peso gains on weaker USD, c. bank policy tightening

By Navya Mittal

Nov 18 (Reuters)The Philippine peso notched its first gain in four days against the US dollar on Friday, helped by a weaker US currency and a central bank rate increase that matched the Federal Reserve.

The peso PHP= rose 0.2%, recouping some of this week’s losses. Stocks in Manila .PSI inched up for the second straight day and were on track for their best week in three.

The dollar =USD eased 0.1% as investors continued to wrangle with recent inflation and retail sales data and its impact on future Fed policy.

On Thursday, the central bank Bangko Sentral ng Pilipinas (BSP) raised its key policy rate PHCBIR=ECI by 75 basis points and signaled more rate hikes ahead.

“The Fed also looks set to shift to smaller pace of hikes, which possibly puts less weakening pressures on the PHP against the USD, and reduces the need for outsized BSP hikes to maintain reasonable positive interest rate differential,” DBS analysts said in a note .

The peso has shed 11% of its value so far this year and is among the worst performing emerging Asian currencies.

Bank Indonesia (BI) also hiked rates by 50 basis points (bps) on Thursday, as widely expected. The bank’s governor on Friday forecast inflation to cool further this month, which may signal a potential slow down in the pace of future rate hikes.

Stock markets in Jakarta .JKSE rose 0.4%. The rupiah IDR=which has depreciated more than 9% this year, traded lower for the fifth straight session following last Friday’s more than 1% surge.

“Overall, Indonesian economic fundamental conditions remain supportive to create appreciation on Indonesian rupiah,” Maybank analysts said, adding that there was room for BI to hike by at least 25 bps in December if the rupiah weakened further.

Regional stock markets were bereft of sharp moves at the end of a week dominated by US economic data, signals from the Fed on future policy, and China easing some COVID-19 curbs.

“China easing COVID restrictions attracted short-term equity investment flows to Asia. Still, the market wants to see China remove all zero-COVID policies and provide more growth support,” said Stephen Innes, managing partner at SPI Asset Management.

The yuan CNY=CFXS bounced slightly after shedding 1.5% over the last two sessions as it gained 0.4%. Chinese stocks .SSEC were roughly flat, but on track to gain for the third consecutive week.

HIGHLIGHTS

** Singapore’s 10-year benchmark yield is up 5 basis points at 3.192%​​

** Inflation data from Singapore, Malaysia due next week

** Thailand awaits Q3 GDP and central bank policy decision next week

Asia stock indexes and currencies at 0457 GMT

COUNTRY

FX RIC

FX DAILY %

FX YTD %

INDEX

STOCKS DAILY %

STOCKS YTD %

Japan

JPY=

+0.21

-17.74

.N225

-0.09

-3.08

China

CNY=CFXS

+0.40

-10.82

.SSEC

-0.11

-14.50

India

INR=IN

-0.01

-8.97

.NSEI

-0.26

5.43

Indonesia

IDR=

-0.19

-9.18

.JKSE

0.54

7.62

Malaysia

MYR=

+0.00

-8.48

.CLSE

0.06

-7.54

Philippines

PHP=

+0.19

-11.06

.PSI

0.32

-9.81

S. Korea

KRW=KFTC

-0.09

-11.30

.KS11

0.25

-17.75

Singapore

SGD=

+0.03

-1.81

.STI

-0.33

4.85

Taiwan

TWD=TP

-0.03

-11.16

.TWII

-0.27

-20.44

Thailand

THB=TH

-0.10

-6.85

.BECAUSE YOU

0.03

-2.55

Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

Asian stock marketshttps://tmsnrt.rs/2zpUAr4

(Reporting by Navya Mittal Editing by Miral Fahmy)

((Navya.mittal@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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