*
South Korean won rises from 5-month low
*
Malaysia's March CPI rises 3.4% on-year vs forecast 3.6%
*
Markets in Indonesia closed for holiday
By Harish Sridharan April 20 (Reuters) - Asian currencies steadied against an easing dollar on Thursday as markets continued to be cautious in the absence of fresh triggers, ahead of an expected 25 basis point hike in interest rates by the U.S. Federal Reserve next month. The Philippine peso and Malaysia's ringgit notched gains. South Korea's won had depreciated 0.2% to hit a five-month low, but reclaimed those losses to trade flat. The dollar index dipped 0.14% to 101.85.
The Fed is likely to deliver a final 25-basis-point rate increase in May and then hold rates steady for the rest of the year, based on a Reuters poll. Money markets are now pricing in a more than 90% probability that the Fed will raise interest rates by 25 basis points next month, up from a probability of 81.4% on Monday. Elsewhere, China kept its benchmark lending rates unchanged for the eighth straight month in a widely expected move, as the country's economic recovery reduced the need for any immediate monetary support. The blue-chip CSI 300 Index was down 0.5%, while the Shanghai Composite Index dropped 0.6%. The yuan traded flat. Earlier this week, the world's second-largest economy grew at a faster-than-expected pace in the first quarter, boosted by the end of strict COVID curbs. But market reaction to the upbeat data was fairly muted, and Asian currencies have, in fact, traded weaker in narrow ranges this week, weighed by a stronger dollar and upward moves in U.S. yields. The two-year U.S. yield reached 4.286% overnight, the highest level since mid-March.
Taipei's benchmark index was down 0.2%, despite a 0.6% jump in Taiwan Semiconductor Manufacturing Co Ltd (TSMC) after the chipmaker posted a 2% rise in first-quarter net profit.
Shares in Seoul and Kuala Lumpur declined, while stocks in Bangkok hit a two-week low. Equities in Manila made their biggest single-day gain since April 5 Meanwhile, Malaysia's consumer price index (CPI) in March rose 3.4% from a year earlier, compared to a 3.6% growth forecast in a Reuters Poll.
"With core inflation still sticky, our base case is still for another 25bp rate hike in July, taking the policy rate to 3.00%, though we acknowledge risks around the timing of the next move," said Brian Tan, senior economist at Barclays. Emerging markets such as South Korea, Singapore and India have recently paused sustained policy tightening campaigns as growth concerns take precedence over high inflation.
HIGHLIGHTS
** India's population to overtake China, with 2.9 mln more
people by mid-2023, UN estimates
** China keeps lending benchmarks unchanged amid signs of
recovery
** Fed's Williams: Unsure how tighter financial conditions
will slow economy
Asia stock indexes and currencies at 0625 GMT
COUNTRY FX RIC FX FX INDEX STOCK STOCK
DAILY YTD % S S YTD
% DAILY %
%
Japan +0.12 -2.54 0.18 9.82
China -0.00 +0.21 -0.29 8.77
India +0.09 +0.69 0.06 -2.62
Indonesia - +4.89 - -0.42
Malaysia +0.16 -0.74 -0.35 -5.04
Philippines +0.16 -1.14 0.76 -1.09
S.Korea +0.01 -4.61 -0.52 14.55
Singapore +0.08 +0.49 -0.28 1.95
Taiwan -0.16 +0.31 -0.40 11.10
Thailand +0.07 +0.52 -0.43 -5.68
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic: World FX rates Asian stock markets ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Harish Sridharan in Bengaluru)
