By Sameer Manekar
Aug 12 (Reuters) – Asian currencies were largely subdued on Thursday, with South Korean won hitting a 10-month low, as rising coronavirus infections cast a shadow over the region’s economies.
South Korea’s won KRW=KFTC weakened 0.3% to hit its lowest since October, easing for a fourth straight session as the country battled to contain its worst coronavirus outbreak, due to the emergence of the highly infectious Delta variant. .KS
Singapore dollar SGD= slipped 0.15%, while equities .STI advanced half a percent, a day after losing 0.9% and the country hiking its annual growth forecast.
Declines among emerging Asia currencies came despite broad weakness in the U.S. dollar after data showed a slight moderation in U.S. consumer prices for July.
The U.S. dollar index =USD slipped off its four-month peak, while 10-year treasury yields US10YT=RR ticked higher on Thursday after slipping in the previous session. USD/US/
That eased concerns that the U.S. Federal Reserve would imminently signal a scaling back of bond purchases and begin lifting rates from near zero, comforting some of the risk-sensitive Asian markets, however, only for the time being.
“It is premature to draw conclusions about where inflation will settle once more of the ‘transitory’ aspects fade given fiscal stimulus layering on monetary accommodation,” said Venkateswaran Lavanya, an analyst at Mizuho Bank.
“So, it stands to reason that U.S. Treasury yields and U.S. dollar being contained after recent pick-up is not to be mistaken for a sustained capitulation; certainly not on account of one CPI data point.”
In Philippines, equities .PSI fell nearly a percent as the country reeled under the pressure of rising cases of the Delta variant of the coronavirus as well as movement restrictions in the Manila metropolis.
However, the peso PHP= showed some resilience, strengthening 0.2% ahead of the central bank meeting later in the day where the Bangko Sentral ng Pilipinas (BSP) is expected to hold its key interest rate at record-low of 2%, a Reuters poll showed.
Analysts at Dutch bank ING expect BSP to hold the key rate steady, but added that “a possible reduction in the reserve requirement is now likely to help shore up liquidity support”.
Elsewhere, Jakarta’s benchmark index .JKSE gained half a percent after losing 0.6% earlier in the day, while Malaysian shares .KLSE recovered initial losses to trade flat.
Markets in Thailand .SETI, THB=TH were closed for a public holiday.
** Indonesian 10-year benchmark yields rise 1.1 basis points to 6.355%
** Taiwan dollar TWD=TP appreciates 0.2%
** Thai c.bank eyes credit market to help kick-start economy
Asia stock indexes and currencies at 0346 GMT
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SE Asian currencies in Augusthttps://tmsnrt.rs/3fXOWkV
(Reporting by Sameer Manekar in Bengaluru; Editing by Simon Cameron-Moore)
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