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Global recession fears take over markets
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U.S dollar bounces from two-month lows
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RBI surprises by holding rates
By Archishma Iyer April 6 (Reuters) - Most Asian currencies and stocks stayed on the back foot on Thursday, as investors took flight to safe-haven assets due to prospects of an imminent global recession. Trading was somewhat muted in the run-up to Easter holidays in some major markets. In China, Asia's largest economy, and Taiwan, trading resumed after a public holiday. The South Korean won was the biggest loser, depreciating nearly 0.7%. This was closely followed by the Taiwan dollar which fell as much 0.3%
Other currencies, such as the Singapore dollar , the Malaysian ringgit , and the Chinese yuan fell between 0.1% and 0.2%.
Slowing U.S. services sector data overnight, along with bleak private payrolls growth for March, strengthened the case for the U.S. Federal Reserve to consider pausing its aggressive rate hike path and induced recession fears. That resulted in investors placing their bets on the safe-haven dollar, which has since bounced off from its two-month lows.
The dollar index , which measures the strength of the greenback against six major currencies, was 101.987 at 0635 GMT. "The Fed has done the bulk of the work raising rates and thus with demand impacted from tighter financial conditions, the Fed is likely to assess the hikes they have done, in light of weakness in financial stability and softness in the economy," said Natixis Senior Asia Economist Trinh Nguyen. The Indian rupee was the only bright spot in an otherwise sombre currency basket, gaining about 0.1% to hit its highest in around three weeks.
The Reserve Bank of India had surprised markets by its key repo rate steady after six consecutive hikes, while most analysts had expected a final 25 basis point hike. RBI Governor Shaktikanta Das announced a measure to deepen forex markets by permitting banks with IFSC banking units to offer non-deliverable derivative contracts involving the rupee to resident users in the onshore market, post which the rupee gained some momentum. "It is a welcome step towards deepening rupee liquidity, moving towards internationalization of rupee and offering flexibility to residents in meeting their hedging requirements," Kunal Sodhani, VP, Global Trading Center, Shinhan Bank said. In stock markets, most Asian shares fell. South Korea's KOSPI was one of the leading laggards, falling nearly 1.3%.
Indices in Singapore , Malaysia and Indonesia fell in a range of 0.2% to 0.8%.
HIGHLIGHTS:
** Indonesian 10-year benchmark yields fall to 6.676%
** Indonesia plans higher 2024 spending to complete
strategic projects, new capital
** Thailand's promised cannabis bonanza disappoints as
politicians trade blame Asia stock indexes and currencies
at 0635 GMT
COUNTRY FX RIC FX FX INDEX STOCKS STOCKS
DAILY YTD % DAILY YTD %
% %
Japan -0.11 -0.26 -1.10 5.41
China <CNY=CFXS -0.04 +0.30 -0.21 7.00
>
India +0.05 +0.93 0.33 -2.71
Indonesi +0.00 +4.32 -0.22 -0.67
a
Malaysia -0.11 -0.05 -0.85 -5.22
Philippi -0.07 +2.20 0.25 -1.19
nes
S.Korea <KRW=KFTC -0.65 -4.14 -1.44 9.96
>
Singapor -0.11 +0.81 -0.60 1.46
e
Taiwan -0.26 +0.57 -0.36 11.83
Thailand -0.38 +1.50 -1.44 -5.84
(Reporting by Archishma Iyer in Bengaluru; editing by Uttaresh
Venkateshwaran)
