Philippine peso, Thai baht firm on rate hike expectations

Thursday,   08-Dec-2022   10:21 AM (IST)

The Philippine peso and Thailand's baht rose on Thursday after inflation data this week raised the probability of more interest rate rises by their central banks to bring down soaring prices. Other Southeast Asian currencies inched lower as global recession worries and the prospect of aggressive interest rate hikes by the U.S. Federal Reserve hurt risk sentiment. The Singapore dollar, Malaysia's ringgit, China's yuan and Taiwan dollar fell 0.1% each. The peso appreciated 0.3% and the baht gained 0.4%. Annual inflation in the archipelago, which accelerated to 8% in November from a year earlier, strengthened the case for a 50 basis point (bps) hike by the Bangko Sentral ng Pilipinas (BSP) at its upcoming Dec. 15 meeting. On Wednesday, data showed Thailand's headline CPI rose by 5.55% in November from a year earlier, marking its slowest pace in seven months although the pace far exceeds the central bank's target range of 1% to 3%. The Bank of Thailand (BoT) has raised rates by a total of 75 bps since August, including the latest 25 bp hike in late-November. The dollar index, which measures the greenback versus six peers, was up 0.1% to 105.27, adding pressure on regional currencies. Investors are keenly awaiting inflation data from the U.S. and the policy-setting Federal Open Market Committee where a half-percentage point hike is expected, with just 9% odds for another 75 bps increase. The two-day meeting will begin on Dec. 13. Meanwhile, China on Wednesday announced the most sweeping changes to its resolute anti-COVID regime, such as allowing infected people with mild symptoms to quarantine at home. However, China's easing of COVID curbs did not significantly impact emerging Asia. Equities across emerging Asia were mixed, with Indonesia's benchmark index declining 1.4% and stocks in Singapore advancing 0.3%. Equities in Bangkok and Kuala Lumpur  fell 0.4% and 0.2%, respectively. The Philippine stock market was closed for a public holiday.