*
Singapore dollar hits lowest since Jan. 6
*
Thai baht hits lowest level since December
*
Some Asian FX headed for weekly losses
By Tejaswi Marthi Feb 17 (Reuters) - Asian currencies and stocks slipped on Friday as a host of strong economic data from the United States and hawkish Federal reserve comments revived fears that the U.S. central bank will stick to its path of rate increases to tame inflation.
The dour sentiment comes a day after investors chose to cheer a slew of strong data in the hope it would uphold economic growth, rather than worry about it being likely to support the case for higher rates. The Malaysian ringgit fell 0.6% to its lowest level in over one month. For the week, the ringgit was headed to drop 2.3%, its sharpest fall in more than two years. The Indonesian rupiah and the Singapore dollar both fell 0.3%. The Thai baht lost 0.6% and fell to its lowest level this year after Thailand's economic growth only expanded 1.4% in the October-December period from a year earlier, hurt by a dip in exports and manufacturing.
That compared with a forecast rise of 3.5% in a Reuters poll and revised 4.6% growth in the September quarter.
Data from U.S. Labor Department overnight showed monthly producer prices accelerated in January, while a separate report from the agency showed the number of Americans filing new claims for unemployment benefits unexpectedly fell last week. "EM assets might remain under pressure in the near term. The increase in US rates and profit-taking in distressed sectors of emerging markets (EM) dented credit year-to-date total returns there. EM local markets should start to consolidate after the sharp move higher in rates. We see low risks of material EM FX weakness," Barclays analysts said in a note.
Weighing on the sentiment more was comments from two Federal Reserve officials who said that the U.S. central bank likely should have lifted interest rates more than it did early this month, and warned that additional increases in borrowing costs are essential to get inflation down to desired levels. "We have highlighted how it was a mistake to reduce from 50 to 25-point increments so early in this fight against inflation. And this is what markets are completely failing to understand and factor in. That this is a long fight against inflation," said Clifford Bennet, chief economist at ACY Securities.
Meanwhile, the Philippine central bank, which raised
benchmark interest rates by 50 basis points on Thursday,
flagged a 25 or 50 basis points increase at its next meeting.
"Inflation, running at a 14-year high of 8.7% in January, is
the BSP's primary concern, with interest rate hikes meant to
increase the chances of a lower than 4% year-on-year inflation
by the end of 2023," Bangko Sentral ng Pilipinas (BSP) Governor
Felipe Medalla said in a television interview.
Stocks in the region were also subdued on fears of a hawkish Fed. South Korean shares fell 0.8%, followed by 0.7% fall in the Philippine stocks . Equities in Malaysia and Singapore also fell.
HIGHLIGHTS:
** Indonesian 10-year benchmark yields fall 5.3 basis points
to 6.721%
** Singapore's Jan non-oil domestic exports fall 25% y/y
** Oil prices on track to finish week lower on U.S. rate
hike worries
Asia stock indexes and currencies at 0435 GMT
COUNTRY FX RIC FX FX INDE STOCKS STOCKS
DAILY % YTD % X DAILY YTD %
%
Japan -0.56 -2.66 <.N2 -0.65 5.45
25>
China <CNY=CFXS -0.33 +0.32 <.SS -0.16 5.00
> EC>
India -0.05 -0.05 <.NS -0.09 -0.47
EI>
Indonesi -0.24 +2.47 <.JK -0.26 0.39
a SE>
Malaysia -0.58 -0.62 <.KL -0.54 -1.28
SE>
Philippi -0.27 +0.69 <.PS -0.75 3.02
nes I>
S.Korea <KRW=KFTC -1.18 -2.74 <.KS -0.78 9.83
> 11>
Singapor -0.26 +0.02 <.ST 0.43 2.28
e I>
Taiwan -0.33 +1.08 <.TW -0.48 9.47
II>
Thailand -0.64 +0.06 <.SE -0.53 -1.15
TI>
(Reporting by Tejaswi Marthi in Bengaluru; Editing by Robert
Birsel)
