Asian FX slips on Ukraine jitters, Malaysia leads stock losses

Author of the article: Most Asian currencies started the week on a negative footing on Monday, with the South Korean won and Thai baht leading losses as investors assessed the fallout from an intensifying Russia-Ukraine conflict, while regional equities were mixed. The Malaysian ringgit and the Philippine peso slipped about 0.2% each, with the peso…
Asian FX slips on Ukraine jitters, Malaysia leads stock losses

Author of the article:

Most Asian currencies started the week

on a negative footing on Monday, with the South Korean won and

Thai baht leading losses as investors assessed the fallout from

an intensifying Russia-Ukraine conflict, while regional equities

were mixed.

The Malaysian ringgit and the Philippine peso

slipped about 0.2% each, with the peso continuing its decline

for a third session as the central bank last week hinted it may

not keep step with monetary tightening in the United

States.

In regional equities, the Malaysian benchmark shed

up to 0.6%, while stocks in the Philippines, Singapore

, and Thailand advanced between 0.4% and 0.7%.

Chinese stocks gained up to half a percent in a

fourth consecutive winning session after the central bank kept

its benchmark rate for corporate and household lending

unchanged, as expected.

China’s yuan, one of the region’s most traded

currencies, was largely unchanged on Monday at 6.3624 per

dollar, after volatility last week saw it hit a three-month low

of 6.3880 amid surging COVID-19 cases.

Amid rising infections, slowing economic growth and investor

worries over China getting caught in the crosshairs of Western

sanctions due to its close ties with Russia, analysts widely see

the case for monetary stimulus building.

“The (Chinese) economy is losing momentum … there are also

growing headwinds from lockdowns in the wake of rising COVID-19

cases, which will hurt consumer activity and raise risks of

supply chain disruptions,” analysts at TD Securities said.

“We think this will be met with further monetary easing and

a small pick-up in credit growth, and look for a 10 basis points

cut in the loan prime rate (LPR) next month. We also expect a 50

basis points cut in the reserve requirement ratio very soon.”

China, the world’s manufacturing powerhouse and top consumer

of commodities, is Southeast Asia’s biggest trading partner and

materially influences the regional economies.

Elsewhere, the South Korean won weakened 0.5% to

mark its worst day in a week, while the Thai baht

depreciated 0.3%. The Indonesian rupiah and Singapore

dollar were mostly unchanged.

As the conflict in Ukraine intensifies, rising commodity

prices, inflationary pressures and exposure to imports from

Russia now pose a challenge to the nascent recovery in the

region.

“Although the direct effects of the Russia-Ukraine conflict

and the magnitude of the negative spillover to growth are likely

to depend on how long the war lasts, slower global growth,

especially in Europe, will weigh on the region’s economies,”

analysts at Barclays said in a note.

HIGHLIGHTS:

** Indonesian 10-year benchmark yields edge higher to 6.736%

** Trading in shares of China Evergrande, units halted –

HKEx

** Philippines returns to offshore bond market with

three-tranche offer

Asia stock

indexes and

currencies

at 0350 GMT

COUNTRY FX FX FX INDEX STOCKS STOCKS

RIC DAILY YTD DAILY YTD %

% % %

Japan -0.01 -3.44 <.n225>

China >

India >

Indonesia +0.03 -0.59 <.jkse>

Malaysia -0.15 -0.80 <.klse>

Philippines -0.10 -2.58 0.33 -1.29

S.Korea >

Singapore -0.08 -0.50 0.16 6.80

Taiwan >

Thailand >

(Reporting by Sameer Manekar in Bengaluru; Editing by

Jacqueline Wong)

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