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Monday, September 26, 2022
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Asian currencies slip as Russia-Ukraine conflict intensifies

Asian currencies slip

The South Korean won and Thai baht lead losses as investors assessed the fallout from an intensifying Russia-Ukraine conflict

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.

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.

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.

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