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Philippine cenbank raises interest rate by 50 bps
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Bank Indonesia stands pat on interest rate
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Most Asian currencies rebound on weaker dollar
By Tejaswi Marthi Feb 16 (Reuters) - The Philippine peso extended gains and was the top gainer among its peers on Thursday after the country's central bank hiked rates by a widely expected 50 basis points to quell surging inflation and as a wobbly dollar also supported sentiment.
The peso climbed 0.5% after the Bangko Sentral ng Pilipinas (BSP) hiked its overnight borrowing rate to 6% and announced an upward adjustment to the 2023 inflation forecast.
The central bank said it was unlikely that they would stop hiking interest rates in the next meeting, but flagged a possible end to the tightening cycle in the first half of this year. "BSP's latest inflation forecast and admission that price pressure broadened could open the door for additional rate hikes in the coming months," said Nicholas Mapa, senior economist for the Philippines at ING.
"We now expect a 25bps rate hike by the BSP at the March meeting with our forecast for terminal rate to 6.25%," he added.
The Indonesian rupiah gained 0.3% after Bank Indonesia (BI), the top banker of the country, stood pat on its interest rate, marking an end to a six-month-long hiking cycle. BI stressed that the current levels should be sufficient to guide inflation back to within its target range by the end of this year.
"To bring headline inflation within the target range is achievable, provided oil prices don't creep up and a dovish stance in the global market is sustained until the year-end," said Fakrul Fulvian, an economist at Trimegah Securities.
That stands in sharp contrast with the U.S. Federal Reserve, which has been raising rates for nearly a year and is expected to hike by 25 basis points at least twice more. Other Asian currencies inched higher on a muted dollar as investors chose to cheer signs that the overall global growth outlook is improving following a slew of strong U.S. economic data.
The Singapore dollar and the Indian rupee advanced 0.2% each while the Taiwan dollar gained 0.1%.
U.S. retail sales rebounded sharply in January - up 3%, against expectations of a 1.8% rise - after two straight monthly declines, driven by purchases of motor vehicles and other goods, the U.S. Commerce Department said on Wednesday. The figures came on the heels of data that showed a stronger-than-expected labour market and stickier-than-forecast inflation. "The better-than-expected U.S. data should support global growth picture. In addition, China reopening story has yet to fully play out and if data in coming weeks starts to show a pick-up in activity, this should bode well for global growth," said Christopher Wong, currency strategist at OCBC. HIGHLIGHTS:
** Indonesian 10-year benchmark yields rise to 6.754%
** POLL-Economic growth slowed in tourism-reliant Thailand in Q4 Asia stock indexes and currencies at 0758 GMT
COUNTRY FX RIC FX FX INDEX STOCKS STOCKS
DAILY % YTD % DAILY YTD %
%
Japan +0.25 -1.99 0.71 6.14
China -0.07 +0.63 -0.96 5.17
India +0.19 +0.09 0.38 -0.12
Indonesia +0.31 +2.72 -0.32 0.61
Malaysia -0.23 +0.00 -0.14 -0.62
Philippines +0.49 +1.05 -0.09 3.80
S.Korea -0.20 -1.58 1.96 10.69
Singapore +0.13 +0.43 1.06 1.98
Taiwan +0.10 +1.42 0.76 9.99
Thailand -0.01 +0.95 0.47 -0.81
(Reporting by Tejaswi Marthi in Bengaluru; Editing by Sherry Jacob-Phillips)
