October 3, 2022: Most emerging Asian currencies were weighed down on Monday, with Thailand’s baht leading the laggards in a holiday-thinned trade, as worries over searing inflation and recession continued to dominate the market.
Markets in China are closed for the week for National Day and South Korea was closed on Monday for a public holiday.
Surging inflation and a potential downturn in global economies have weighed on risk-sensitive Asian assets, prompting a rush to safe-havens assets such as the US dollar.
Additionally, market participants await US non-farm payrolls later this week for further ideas on the Federal Reserve’s future course on rate hikes.
The Thai baht slumped 0.8% as higher oil prices added pressure on the currency, after the Organisation of Petroleum Exporting Countries said its could cut output by more than a million barrels a day.
“It could be some commodities-related flows again that could contribute to the unit’s depreciation today,” said Poon Panichpibool, a markets strategist at Krung Thai Bank.
“Some market players could buy commodities like crude oil and these commodities-buying flows are usually done in dollar terms so market players have to buy the greenback and sell the baht.”
Moreover, the Malaysian ringgit dipped 0.1% in its eighth consecutive session of losses and hit its lowest level since 1998.
The country’s central bank chief, meanwhile, said that the weakening of the currency was not a reflection of the state of the economy.
The ringgit has lost about 12% against the dollar so far this year.
Elsewhere, the Indonesian rupiah lost 0.5% after South-East Asia’s largest economy reported a rise in inflation to 5.95%, although it was slightly less than expected.
“Rising inflation will likely convince Bank Indonesia to stay hawkish with more rate hikes likely at the Oct. 20 meeting,” analysts at ING wrote.
Inflation prints across Asian economies such as Taiwan, the Philippines and Thailand this week are likely to dictate the course of their respective central banks.
Other units such as the Philippines peso and the Taiwan dollar fell about 0.4% each.
Most regional equities also faced risk aversion in a holiday-heavy week, with Philippine stocks trading about 0.3% lower at around a two-year low.
Other stock markets such as Singapore, Malaysia and Thailand slipped between 0.4% and 1.3%.
** Indonesian 10-year benchmark yields fall to 7.358%
** Asia’s factory activity weakens on global slowdown, cost pressures
** Thai central bank says has acted to curb baht volatility