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ASIA MARKETS: Shares, Currencies Mostly Lower On Quicker Fed Taper Speculation

Thursday,   25-Nov-2021   09:49 AM (IST)

Asian shares and currencies were broadly weaker today amid increasing bets that the U.S. Federal Reserve may wind down its monthly bond purchases sooner than anticipated. Shares in South Korea, Singapore, and China declined. Japanese equities outperformed, helped by the yen’s fall to near 115.50 to the dollar. The FTSE Bursa Malaysia KLCI Index slipped 0.1%. Telekom Malaysia and Maxis paced losers on the KLCI, while Kuala Lumpur Kepong was the top performer. The Malaysian ringgit dropped 0.4% to 4.2240, the lowest level in more than a year. The South Korean won advanced 0.5% and the Indonesian rupiah dropped 0.1%. The Bank of Korea raised the policy rate by a quarter percentage point, in line with expectations, amid inflation and property price risks. The dollar index was a tad lower after reaching new highs for the year yesterday. Minutes of the Fed's November meeting emboldened speculation that the central bank, in the face of inflation pressures, may decide to speed up the taper pace from the current $15 billion a month. The minutes showed that policymakers had an extensive debate on the inflation outlook, with various officials noting that the Fed should be prepared to adjust the pace of asset purchases if inflation continued to run high. That would allow the Fed more flexibility in increasing interest rates if price pressures persisted, officials pointed out. San Francisco Fed President Mary Daly, considered among the more dovish members, said she is open to a quicker wind-down of the bond-buying program if next month’s data on the labor market and inflation continued to exhibit strength. U.S. economic data released yesterday supported bets that the Fed could turn more hawkish. Price pressures, indicated by the Fed’s preferred inflation measure, continued to persist, while initial jobless claims dropped below 200,000 to the lowest in more than 50 years. U.S. consumer spending in October topped expectations. Yields on near-term U.S. Treasuries rose yesterday, pricing in increased odds of a faster move by the Fed to raise interest rates. The yield on the two-year Treasury bond rose yesterday to hover near its highest level since May 2020.