*
Ringgit hits lowest level in more than three months
*
Powell flags bigger near-term interest rate hikes
*
U.S. dollar climbs to three-month peak
By Roushni Nair March 8 (Reuters) - Most emerging Asian currencies weakened against a strong dollar on Wednesday, with the Malaysian ringgit the biggest loser, after U.S. Federal Reserve Chair Jerome Powell said interest rates would likely need to rise more than expected. The ringgit weakened 1.11% to its lowest level since late November, while the South Korean won depreciated as much as 1.88%, eyeing its worst day in over four weeks.
The Indonesian rupiah , the best-performing currency among its peers so far this year, and the Philippine peso followed suit to retreat 0.8% each, while the Indian rupee and Thailand's baht weakened 0.4% and 0.3%, respectively.
Powell, during testimony to Congress overnight, flagged that a string of stronger-than-expected economic data indicated that "the ultimate level of interest rates is likely to be higher than previously anticipated."
Central banks globally will now look to further monetary policy tightening to rein in sticky inflation, which in turn will spur volatility in Asian emerging markets, said Jeff Ng, a senior currency analyst at MUFG.
"For now, I think the current trend still suggests some dollar strength, especially in the first half of the year, but we anticipate that there will be some stability by the second-half," he said. "I think some of the more low-yielding currencies like the baht and ringgit have been particularly vulnerable as evidenced by the recent retreat against the US dollar due to the current dollar strength," Ng added, forecasting that the outlook for Asian currencies was set to improve in the second half.
The U.S. dollar index , which measures the dollar against a basket of six major currencies, jumped 1.3% overnight to a three-month peak of 105.65.
In Malaysia, the central bank is expected to hold its policy interest rate unchanged at 2.75% on Thursday, according to data from economists polled by Reuters, even as inflation in the country still remains above its target range of 2% to 3%.
Most stock markets in the region tracked Wall Street lower, with equities in Manila giving up 1.2% to eye its worst day in over a week. Singapore's benchmark index and Thailand's stocks lost 0.5%, each.
Shares in Indonesia and China fell 0.48% each.
HIGHLIGHTS:
** Indonesian 10-year benchmark yields rise 4.0 basis points
to 7.013%
** South Korea to lift pre-departure COVID test mandate for
travellers from China
** India bond yields jump as bets of larger Fed rate hike
rise
Asia stock indexes and currencies
at 0442 GMT
COUNTRY FX RIC FX FX INDEX STOCKS STOCKS
DAILY % YTD % DAILY YTD %
%
Japan -0.49 -4.86 0.36 10.48
China <CNY=CFXS -0.04 -1.08 -0.48 5.83
>
India -0.24 +0.74 -0.19 -2.36
Indonesi -0.62 +0.81 -0.49 -1.71
a
Malaysia -1.11 -2.65 -0.41 -2.87
Philippi -0.65 +0.47 -1.17 0.91
nes
S.Korea <KRW=KFTC -1.74 -4.38 -1.22 8.80
>
Singapor -0.13 -1.19 -0.56 -0.75
e
Taiwan -0.57 -0.20 -0.57 11.53
Thailand -0.13 -1.52 -0.55 -3.54
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic: World FX rates Asian stock markets ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Roushni Nair in Bengaluru; Editing by Jamie
Freed)
