Malaysian ringgit, Thai baht hit by safety flows, growth woes

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The Malaysian ringgit and Thai baht led

losses among emerging Asian markets on Tuesday, as an elevated

U.S. dollar and recession worries undermined the currencies.

The ringgit was down 0.1% to hit its weakest since

March 2017 while the Thai baht also slipped 0.1%. The

Indian rupee hit a seventh straight session of record

lows as well, on dollar strength.

“I think the main driver for Asian currencies remains the

USD which moved up recently from demands for safe haven assets

amid concerns over economic recession,” said Pon Panichpibool,

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markets strategist at Krung Thai Bank.

The dollar, which initially paused at a two-decade peak

after markets pared back their bets on the size of U.S. rate

hikes, continued its ascent as a series of aggressive rate hikes

and fears of a possible recession drove investors towards safe

haven assets.

“Concerns over the COVID-19 situation in China and the

worsening trade deficit on higher energy import bill, coupled

with Bank of Thailand’s (BOT) commitment to a gradual and steady

hiking cycle are adding pressure to the baht,” Barclays analysts

observed.

Regional currencies were also pressured by a rise in oil

prices overnight as the greenback’s retreat from multi-year

highs supported buying interest and on expectations that the

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U.S. Federal Reserve’s interest rate hike may be less than

expected.

The BOT is the only other emerging market central bank in

the region, besides Bank Indonesia, to hold interest rates at a

record low despite surging inflation. However, central bank

officials have signaled that the BOT was highly likely to

tighten monetary policy at their August meeting.

“I think the BOT will start with 25 basis point hike unless

they see a rise in medium term inflation expectations and face

severe fund outflows and volatility in the baht,” he added.

Bank Indonesia is likely to hold interest rates at a record

low when it meets on Thursday, a Reuters poll found. However,

one in three economists expected BI to hike rates by 25 basis

points to shore up the rupiah and stand guard against capital

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outflows stemming from aggressive U.S. rate hikes.

Stocks in the region also fell after taking cues from a weak

Wall Street session on Monday. Equities in Thailand fell

1.1% to lead losses, followed by a 0.3% decline in South Korean

stocks

HIGHLIGHTS:

** Indonesian 10-year benchmark yields rise 4.2 basis points

to hit near 4-week high of 7.434%

** China’s Tianjin halts some businesses in fresh COVID

curbs

** China raises loan-support efforts for developers amid

mortgage boycott

Asia stock indexes and currencies at 0445 GMT

COUNTRY FX FX FX INDEX STOCKS STOCKS

RIC DAILY YTD YTD %

% % DAILY

%

Japan +0.04 -16.64 0.74 -6.27

China

India +0.05 -7.01 -0.02 -6.22

Indonesia -0.07 -4.95 0.75 1.94

Malaysia -0.11 -6.55 -0.20 -8.98

Philippine -0.04 -9.50 0.01 -11.98

s

S.Korea

Singapore +0.09 -3.35 -0.02 -0.08

Taiwan -0.08 -7.51 -0.34 -19.48

Thailand -0.09 -8.91 -1.16 -7.88

(Reporting by Tejaswi Marthi in Bengaluru; Editing by

Jacqueline Wong)