South Korean won leads mostly moderate declines among Asian currencies

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  • South Korea won at nearly two-week low
  • Malaysia and Philippine stocks decline
  • Indonesian stocks at their highest since mid-December
  • Singapore’s 2021 GDP grows at the fastest rate in more than a decade

Jan. 3 (Reuters) – The South Korean won fell 0.3% on Monday to its lowest level in nearly two weeks, while concerns over Omicron and inflation also held up most Asian currencies Southeast moderate on the first trading day of the year.

The Malaysian ringgit, Singapore dollar and Indonesian rupiah weakened by around 0.2%.

With inflationary concerns mounting, investors in risk-sensitive Asian markets will be watching closely how the US Federal Reserve plans to cut monetary stimulus, especially in light of the spread of the Omicron variant of the coronavirus.

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Asian central banks will want to keep interest rates low to offset the impact on their economies of an increase in local COVID-19 infections, without leaving their currencies vulnerable to excessive dollar strength as the Fed begins to withdraw its stimulus measures.

“Omicron’s spread has slowed the resumption of growth in the emerging Asia region in the short term, especially with the reintroduction of social restrictions in some countries,” Mizuho Bank analysts said in a note.

“The policy dilemma for emerging Asian countries will worsen as fiscal policy, despite its extensive bandwidth, remains the mainstay of supporting growth, while monetary policy is caught in the divergent tides of a recovery slower domestic economy and tighter Fed monetary policy. “

In Asia, the South Korean won fell to 1,193.0 per dollar, while stocks (.KS11) jumped more than 1%, supported by strong export data. Read more

In the Philippines, shares (.PSI) fell about 0.8% to their lowest level in a month, after the government said Friday evening it would impose tighter restrictions in the capital region in over the next two weeks to limit infections with Omicron. Read more

The benchmark Malaysian equity market index (.KLSE) fell as much as 1.4% due to flooding in seven states, while Indonesian stocks (.JKSE) rose 0.9% to reach their highest level since mid-December. Read more

Meanwhile, shares of Singapore (.STI) rose about half a percent, with data showing the city-state’s economy grew at its fastest annual pace in more than a decade in 2021, showing signs that a recovery is underway after the worst recession on record. Read more

Singapore, a financial and transportation hub and often seen as an indicator of global growth, is expected to continue to grow over the coming year. However, the spread of the Omicron variant of the coronavirus could hamper growth if restrictions are imposed.

Markets in Thailand (.SETI), China (.SSEC) and Japan (.N225) have been closed for leave.

STRONG POINTS:

** Indonesian 10-year benchmark yields edged down to 6.369%

** Actions of Indonesian coal miners tumble as export ban shakes industry read more

** Daily COVID-19 cases in India highest since September 18, 2021 – Ministry of Health

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Sameer Manekar report in Bangalore; Editing by Simon Cameron-Moore

Our standards: Thomson Reuters Trust Principles.


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