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U.S. PCE data leads to hawkish Fed expectations
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Philippine peso drops 1.3%, MYR down 1%
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Malaysia sets fiscal deficit target at 5%
By Harshita Swaminathan Feb 27 (Reuters) - Asian currencies and stocks fell on Monday, as investors fretted that a slew of strong U.S. economic data would lead the Federal Reserve to raise interest rates higher for longer. The Philippine peso shed the most, weakening 1.3% against the dollar to hit its lowest since Jan. 6. The Malaysian ringgit lost as much as 1% to touch its lowest since Nov. 30. Among equity markets in the region, Philippine stocks dropped 1.5%, while Singapore shares fell 0.4%. Data on Friday showed U.S. consumer spending rebounded last month, while the personal consumption expenditures (PCE) price index, the Fed's preferred gauge of inflation, shot up 0.6%. "Markets may be forced to concede that the Fed may be concerned with the dangers of unleashing 1970s-type 'high and volatile' inflation from rescinding on tight policy too soon," said Vishnu Varathan, an analyst at Mizuho Bank. The dollar held firm near a seven-week high scaled on Friday after the hotter-than-expected data. South Korean stocks and the won , which typically react more sharply to dollar swings, shed 0.9% and 1.4%, respectively.
Indonesia's rupiah was down 0.4% to the dollar, hitting its weakest since mid-January, while the Thai baht fell 0.5%. "There could be more interesting data later this week with the Asia and China PMI. In the meantime, I suppose the currency movements are more driven by the dollar side rather than the local currency side," said Jeff Ng, a senior currency analyst at MUFG Bank. In Malaysia, the prime minister set the fiscal deficit target at 5%, more ambitious than his predecessor's 5.5%, and said his government aimed to reach this by cutting down on spending and taxing capital gains and luxury goods. MUFG Bank's Ng said the budget was "doing more with less" and expects it to be "slightly supportive of private consumption." In other news, the Philippine central bank governor reaffirmed that the country's economic growth would reach at least 6% this year.
China's yuan , which weakened 1.3% last week, was
last seen 0.1% lower on the day amid rising Sino-U.S. tensions.
The United States has warned China of "real costs" if it
provides military aid to Russia to support its invasion of
Ukraine.
HIGHLIGHTS:
** India Q3 GDP likely slowed further in December quarter,
according to Reuters poll; data expected on Tuesday
Asia stock indexes and currencies at
0646 GMT
COUNTRY FX RIC FX FX INDEX STOCKS STOCKS
DAILY YTD % DAILY YTD %
% %
Japan +0.05 -3.87 -0.11 5.09
China -0.08 -0.98 -0.29 5.45
India -0.21 -0.24 -0.53 -4.05
Indonesia -0.39 +1.87 -0.28 -0.20
Malaysia -0.98 -1.72 -0.23 -2.81
Philippines -1.28 +0.16 -1.47 0.32
S.Korea -1.38 -4.42 -0.87 7.43
Singapore -0.14 -0.86 -0.28 0.67
Thailand -0.55 -1.61 -0.23 -2.30
(Reporting by Harshita Swaminathan; Editing by Subhranshu Sahu)
