Asian FX pare losses as dollar weakens after BOJ action

Author of the article: Reuters Harshita Swaminathan Published Dec 19, 2022  •  2 minute read Join the conversation Asian currencies traded mixed on Tuesday, with some currencies reversing course and moving higher Financial Post Top Stories Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc. By…
Asian FX pare losses as dollar weakens after BOJ action

Author of the article:

Reuters

Harshita Swaminathan

Published Dec 19, 2022  •  2 minute read

Join the conversation

Asian currencies traded mixed on

Tuesday, with some currencies reversing course and moving higher

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after the Japanese central bank widened the band around its bond

yield cap, which boosted the yen and weighed on the U.S. dollar.

Singapore’s dollar reversed after the Bank of Japan

(BOJ) move, and rose as much as 0.4% to 1.3517 to the dollar,

before paring gains to about 1.3555. The Indonesian rupiah

also switched back and rose as much as 0.2% after the BOJ

move, but gave up all those gains, and was last seen 0.2% lower.

The BOJ, while holding rates steady, in a surprise move said

it will allow long-term bond yields to rise more as it widened

the band around its yield cap, a move that is being seen as a

sign that more policy normalization is in the offing.

“The BOJ decision to widen the 10-year government bond yield

… it’s affected the Japanese yen, in the way that Japanese yen

appreciated further and that’s really helped Asian currencies,”

said Poon Panichpibool, a markets strategist at Krungthai Bank.

The yen rose 2.7% to 133.25 to the dollar, its best

day since Nov. 10, putting pressure on the dollar index,

which fell as much as 0.7% to 103.94, compared with 104.62 seen

before the BOJ move.

The BOJ’s action took some of the focus off recession fears

that carried over into Asia hours from the overnight session on

Wall Street.

While several Asian currencies such as the Thai baht

and Malaysian ringgit were still weaker on the

day due to broader recession fears, they were at higher levels

than before the BOJ move.

In China, the benchmark lending rate was left unchanged, as

predicted by markets, but expectations of monetary policy easing

are growing, as the country tries to shore up an economy

battered by some of the most severe COVID-19 restrictions.

Analysts at OCBC said there is still room for China to roll

out monetary easing via quantity and price measures.

China also reported five more COVID-19-related deaths for

Monday, up from two deaths a day earlier, after the country

significantly eased its COVID-19 restrictions earlier this

month.

The yuan was broadly stable, moving very

marginally.

Most Asian stock markets were down, tracking their

counterparts on Wall Street. Markets in Jakarta and

South Korea were down 0.8% and 0.9% respectively.

HIGHLIGHTS:

** Indonesian central bank expected to scale down rate hikes

to 25 basis points on Dec. 22, Reuters poll shows

** S. Korean central bank chief says biggest source of

uncertainty over future oil prices and inflation was the war in

Ukraine

Asia stock indexes and currencies at

0419 GMT

COUNTRY FX RIC FX FX YTD INDEX STOCKS STOCKS

DAILY % DAILY YTD %

% %

Japan +2.82 -13.56 -2.36 -7.63

China -0.06 -9.03 -0.64 -15.18

India -0.07 -10.19 -0.85 5.24

Indonesia -0.16 -8.77 -0.84 2.14

Malaysia -0.23 -6.05 -0.29 -6.04

Philippines +0.02 -7.94 0.31 -9.67

S.Korea +0.23 -8.55 -0.94 -21.75

Singapore +0.07 -0.49 -0.35 3.89

Taiwan -0.04 -9.96 -1.36 -21.86

Thailand -0.24 -4.38 -0.66 -3.02

(Reporting by Harshita Swaminathan; Editing by Christopher

Cushing)

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