Asian currencies rise on weaker dollar; eyes on Powell’s testimony

Asian currencies rise on weaker dollar; eyes on Powell’s testimony

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Most Asian currencies strengthened

on Monday against a weak dollar, while China’s modest growth

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target and U.S. Federal Reserve Chair Jerome Powell’s looming

testimony prompted investors to turn cautious.

The South Korean won and the Indian rupee led the gains in

the region. The rupee strengthened 0.2% to hit its

highest level since Feb. 2, while the S. Korean won

and Malaysian ringgit appreciated 0.5% and 0.2%,

respectively.

The Philippine peso and Singapore dollar were

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flat.

China, Southeast Asia’s biggest trading partner, set a

modest economic growth target of around 5% for 2023. It was at

the low end of expectations, as policy sources had recently told

Reuters that a range as high as 6% could be set.

The underwhelming target came despite statements from

officials suggesting that the world’s second-biggest economy is

“steadily improving” thanks to the relaxation of COVID-19

control measures and policies to revive the country’s dwindling

property sector.

“But, with China moving to COVID-19 endemicity and fewer

resources to be spent on testing and virus containment, we

believe the effectiveness of its fiscal and monetary policy will

be improved despite not announcing a more expansionary policy,”

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market analysts at UOB said in a note.

Separately, a slew of economic data in the U.S. rekindled

market fears that the Fed will resort to aggressive interest

rate hikes, with the spotlight now on the February jobs report

due on Friday.

Investors also await Powell’s testimony to Congress on

Tuesday and Wednesday for an update on the central bank’s policy

outlook.

Even as recent projections suggested a terminal rate of 5.1%

this year against the current Fed target range of 4.50%-4.75%,

the market is currently pricing in over 5.4%, Alvin Tan, head of

Asia FX strategy at RBC Capital Markets said, adding that

markets could be volatile this week.

“Powell’s message is going to be consistent with what the

market expects, the big question, however, is will he want to

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move the market even more than that.”

The dollar index, which measures the U.S. currency

against six major peers, was 0.182% lower at 104.420.

Most stock markets in the region tracked Wall Street higher,

with equities in Manila and Mumbai advancing

1.12% and 1.03%, respectively. Stocks in Jakarta and

Kuala Lumpur were largely unchanged.

Shares in Beijing dipped 0.14% and were the only

outlier in the region.

Stocks in Seoul added 1.3% after consumer inflation

in February hit its slowest pace in 10 months, bolstering views

that the central bank is done with its current policy tightening

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cycle after it held rates steady last month.

HIGHLIGHTS:

** Indonesian 10-year benchmark yields fall 1.1 basis points

to 6.971%

** Markets in Thailand were closed for a public holiday

** Indonesia’s inflation to stay above 5% in first half

-c.bank chief

Asia stock indexes and currencies

at 0633 GMT

COUNTRY FX RIC FX FX INDEX STOCKS STOCKS

DAILY % YTD % DAILY YTD %

%

Japan +0.00 -3.50 1.11 9.80

China

India +0.28 +1.21 0.98 -1.87

Indonesi -0.07 +1.70 0.02 -0.52

a

Malaysia +0.16 -1.48 0.09 -2.71

Philippi -0.15 +1.53 1.23 2.60

nes

S.Korea

Singapor -0.11 -0.39 0.28 -0.31

e

Taiwan +0.20 +0.47 0.99 11.50

Thailand 0.00 +0.30 0.00 -3.70

(Reporting by Roushni Nair in Bengaluru; editing by Eileen

Soreng)

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