Thai baht falls as c.bank remains dovish, Asia stocks rise

Article content

The Thai baht extended losses on Friday

after the country’s central bank said inflation was under

control and that future rate hikes would be strictly

data-driven, bucking a firmer trend among regional currencies.

The baht fell 0.4%. Bank of Thailand (BoT) Governor

Sethaput Suthiwartnarueput said inflation would peak in the

third quarter before returning to the target range next year.

He ruled out the need for a special rate meeting, following

off-cycle policy tightening moves by counterparts in the

Article content

Philippines and Singapore last week, adding that rate hikes

would be gradual, as he remained confident that the Thai economy

would return to pre-pandemic levels in the first quarter of

2023.

The Thai and Indonesian central banks are the only emerging

Asian central banks that have not raised rates recently.

“The central bank is going the wrong way. They say they are

ahead of the curve but that is not true because they have

continued to maintain record low rates in the face of surging

inflation,” said Kobsidthi Silpachai, head of capital markets

research at Kasikornbank.

“I expect BOT to hikes rates moderately in August and

November. But I don’t expect them to resort to a hawkish stance

overnight,” he added.

Most currencies in the region edged higher even as the U.S.

Article content

dollar perked up alongside U.S. Treasury yields. Both had fallen

overnight after data showed a slump in factory activity and a

rise in claims for unemployment benefits, implying that the

economy is already feeling the effects of aggressive Federal

Reserve tightening, potentially giving the central bank less to

do in future.

The Malaysian ringgit, Indonesian rupiah and

Indian rupee rose 0.1% each. The Philippines peso

also edged higher.

Equities in Asia’s emerging markets rose for a third

straight session and were set to post weekly gains, as they

continued to ride high on strong earnings results from growth

stocks in the U.S.

Singapore stocks rose 0.7% on Friday, to their

highest level since June 10 and were also up 2.4% this week.

Article content

Stocks in Malaysia and Indonesia gained 2.7% and

3.4%, respectively, for the week.

Wall Street indexes continued their ascent overnight with

results from Tesla and Netflix driving

outperformance in the growth sector.

“Corporate earnings have provided a mixed picture overall,

but subdued factory activity in the U.S. and an uptick in

jobless claims there also point towards further moderation in

economic activities, but markets have been shrugging off these

growth worries for now,” said Jun Rong Yeap, market strategist

at IG.

U.S. equity futures were, however, lower in Asia on Friday

following a downbeat outlook from Snap.

HIGHLIGHTS:

** Malaysia’s June CPI up 3.4% y/y, higher than forecast

** Russia, China property will push emerging market

Article content

corporate default rate above 10%, JPMorgan says

** Top gainers on Singapore’s benchmark index are

Genting Singapore, DBS Group Holdings and

United Overseas Bank, up between 1.6% and 4.5%

Asia stock indexes and currencies at 0451 GMT

COUNTRY FX FX FX INDEX STOCKS STOCKS

RIC YTD DAILY YTD %

DAILY % %

%

Japan -0.27 -16.45 0.46 -2.99

China

India +0.08 -6.95 0.19 -4.13

Indonesia +0.11 -5.08 0.41 4.73

Malaysia +0.09 -6.45 0.60 -6.92

Philippines +0.02 -9.46 0.05 -12.12

S.Korea

Singapore -0.09 -3.01 0.80 1.73

Taiwan -0.13 -7.48 -0.02 -18.03

Thailand -0.39 -9.43 0.40 -6.35

(Reporting by Tejaswi Marthi in Bengaluru; Editing by Sonali

Desai)