Asian FX gains on weaker dollar, China growth optimism

Asian FX gains on weaker dollar, China growth optimism

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Most Asian stocks and currencies

rose on Friday against a softer U.S. dollar, as strong economic

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data from China underpinned expectations that Beijing will set

an ambitious 2023 growth target at its annual parliament meeting

this weekend.

Equities in Mumbai jumped 1.5% to lead gains in the

region. Stocks in Manila climbed 0.8%, although they were

bound for a sixth consecutive weekly loss.

South Korea’s benchmark index rose 0.3%, while

Singapore shares and equities in Taipei edged

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0.1% higher.

Markets are keenly awaiting China’s annual legislative

meeting, scheduled on Sunday, that will implement the biggest

government reshuffle in a decade and set economic targets.

“A higher growth target can nudge China’s growth back to its

potential path,” ANZ analysts said in a note.

“Government officials still hold the view that China’s

potential growth is in the 5%-6% range. Our calculation suggests

that a growth rate of 5.5% can return China’s GDP (gross

domestic product) index to its potential path by the end of this

year.”

Recent data from China suggests that economic recovery is

steady in Southeast Asia’s biggest trading partner following the

easing of strict COVID-19 curbs in December, boosting investors’

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appetite for riskier assets.

“Better than expected Caixin services PMI (purchasing

managers’ index) … continue to ignite hopes of China reopening

trade and this is seeing a positive spill over to risk

sentiments,” analysts at OCBC said in a note.

Adding to the latest string of strong data, the country’s

services sector expanded at the fastest pace in six months in

February, driving a solid increase in employment.

The yuan appreciated 0.3% and was set to mark its

best week since mid-January. Stocks in Shanghai gained

0.4%.

The South Korean won strengthened by 1%, while

India’s rupee rose 0.4%. The Singapore dollar

and Thailand’s baht firmed 0.1% each.

The Philippine peso appreciated 0.5% after the

country’s central bank governor said rates might be hiked by 50

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basis points (bps) in the “worst-case scenario” of inflation

rising above 9%.

Inflation in January hit a 14-year high of 8.7%, prompting

Bangko Sentral ng Pilipinas’ to say it was likely to raise rates

one more time this year, after having hiked by 50 bps last

month.

Meanwhile, Atlanta Federal Reserve President Raphael Bostic

said on Thursday he favored “slow and steady” interest rate

hikes by the central bank to reduce the risk of damaging the

economy, despite new figures indicating the strength of the

labor market.

The dollar index eased 0.2% to 104.72, as traders

tried to gauge the path for Fed’s policy. That further lifted

risk sentiment.

Separately, Indonesia’s poll body on Thursday vowed to forge

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ahead with organizing next year’s presidential election, defying

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a surprise ruling by a district court to halt all election

processes for more than two years.

Stocks in Jakarta retreated 0.6%.

HIGHLIGHTS:

** Activity in India’s dominant services sector expanded at

the fastest pace in 12 years in February on strong demand as

price pressures eased further

** China’s central bank will adjust monetary policy in a

timely and appropriate manner to support a nascent recovery in

the economy

The following table shows rates for Asian currencies against

the dollar at 0618 GMT.

COUNTRY FX RIC FX FX INDE STOCKS STOCKS

DAILY % YTD % X DAILY YTD %

%

Japan +0.22 -3.92 <.n2>

China EC>

India +0.40 +0.55 <.ns ei>

Indonesi -0.16 +1.73 <.jk a se>

Malaysia +0.00 -1.63 <.kl se>

Philippi +0.53 +1.64 <.ps nes i>

S.Korea 11>

Singapor +0.10 -0.45 <.st e i>

Taiwan +0.01 +0.27 <.tw ii>

Thailand +0.06 -0.56 <.se ti>

(Reporting by Upasana Singh in Bengaluru; editing by Eileen

Soreng)

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