*
MYR set for biggest weekly drop since March 2020
*
Chinese yuan set for 4th straight week of loss
*
Stocks in the region fell
By Tejaswi Marthi Feb 24 (Reuters) - Asian currencies were set for weekly losses on Friday, as the U.S. dollar held firm after the Federal Reserve signalled more rate hikes to bring down inflation, while the Chinese yuan fell to a seven-week low on concerns around Sino-U.S. relations. The dollar was poised for its fourth straight weekly gain, as a host of strong economic data and the Fed's commitment to keep interest rates higher for longer helped the greenback erase its year-to-date loss. For the week, the Malaysian ringgit fell 2.3% and was set for its biggest weekly drop since the start of the pandemic. The Singapore dollar fell 0.6% and was on track for its fourth straight weekly loss. The Thai baht shed 0.8%. For the day, the Thai baht and South Korea's won fell 0.6% each. The Philippine peso was the only outlier in the region as it firmed 0.3%
"While resilient global growth should support some EM
assets, the shift in (Fed) terminal rate expectations and the
related increase in rates volatility have dented returns,"
Barclays analysts wrote in a note.
"A further uptick in geopolitical tensions and some
political uncertainties may also curtail investors' risk
appetite in the near term." they added.
The Chinese yuan fell 0.3% after two U.S.
officials said the United States was set to expand the number of
its troops helping train Taiwanese forces.
Sino-U.S. relations have been a key factor influencing the
currency market for the past few years, and traders said the
latest development dented investor sentiment towards the yuan.
Malaysia's consumer price index (CPI) in January rose 3.7%
from a year earlier, government data showed. The rise was in
line with the forecast made by 19 economists in a Reuters poll
and compared with the 3.8% annual rise seen in December.
"We continue to expect the Bank Negara Malaysia (BNM) to
deliver two additional 25 basis-point rate hikes in May and
September, with the hike in May conditional on core inflation
remaining sticky to the upside in coming months," Goldman Sachs
analysts said.
The data comes a month after the central bank stood pat on
interest rates as it wanted to assess the lag effects of its
monetary policy on the economy.
Meanwhile, incoming Bank of Japan Governor Kazuo Ueda said
the central bank must maintain ultra-low interest rates to
support Japan's fragile economy. He warned of the danger of
responding to cost-driven inflation with monetary tightening.
HIGHLIGHTS:
** Japan's five-year government bond yield falls to 0.235%
** India's overnight market rates climb as RBI skips repo
infusion - traders
** Pakistan set to raise interest rates in off-cycle review,
say investors
Asia stock indexes and currencies at 0706 GMT
COUNTRY FX RIC FX FX INDE STOCKS STOCKS
DAILY % YTD % X DAILY YTD %
%
Japan +0.01 -2.65 <.N2 1.29 5.21
25>
China <CNY=CFXS -0.32 -0.45 <.SS -0.50 5.89
> EC>
India -0.04 -0.05 <.NS -0.27 -3.55
EI>
Indonesi -0.18 +2.32 <.JK 0.41 0.25
a SE>
Malaysia -0.07 -0.77 <.KL -0.45 -2.97
SE>
Philippi +0.26 +1.44 <.PS -0.20 1.82
nes I>
S.Korea <KRW=KFTC -0.59 -3.09 <.KS -0.63 8.37
> 11>
Singapor -0.09 -0.29 <.ST 0.68 1.10
e I>
Taiwan -0.20 +0.80 <.TW -0.71 9.66
II>
Thailand -0.50 -0.82 <.SE -0.78 -1.74
TI>
(Rpoerting by Tejaswi Marthi in Bengaluru; Editing by
Subhranshu Sahu)
