EMERGING MARKETS – Thai baht bears losses as Cenbank holds rate

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Band Tejaswi Marthi

June 8 (Reuters)The Thai baht suffered losses on Wednesday as the central bank kept its key interest rate stable to support the economic recovery, while Asian stocks followed a Wall Street rally amid fears that aggressive rate hikes of the central bank does not lead to stagflation.

The baht THB=TH was down 0.1% after falling 0.2% earlier in the session following the central bank’s decision. The Bank of Thailand (BOT), however, raised its consumer price index forecast to 6.2% for fiscal 2022 from 4.9% previously. Thai stocks .SETI rose 0.3% after the announcement.

“While the outcome was widely expected, it is surprising that three of the seven panelists voted for a rate hike at this meeting, suggesting that the hike cycle is imminent,” said Poon Panichpibool, market strategist at Krung. Thai Bank.

Headline inflation in Thailand in May hit its highest level in nearly 14 years and prices are expected to continue to rise. The consumer price index jumped 7.1% year-on-year, beating the central bank’s 1% to 3% target.

“With the tourism industry and Thailand’s current account position gradually improving, it is only fair that the central bank consider tightening the policy rate going forward,” Panichpibool said.

Shares in the region gained momentum, Taiwan’s benchmark .TWII climbing 1% to lead the gains, followed by Indonesia .JKSE, which was trading up 0.7%. Actions in Malaysia .KLSE and India .NSEI also advanced.

India’s central bank raised the repo rate by 50 basis points (bps), the second hike in as many months, to tackle runaway inflation, and said the faster pace of monetary policy normalization in advanced economies had amplified financial market volatility.

The rate hike follows an unanticipated 40bp hike in early May that kicked off the central bank’s tightening cycle, which economists expect to be relatively short.

“We expect key interest rates to rise to such an extent that by the end of the year they will be at or slightly above the rate of inflation. We currently have rates peaking at 5.8 % in the first quarter of fiscal 2023,” ING analysts said. written in a note.

Currencies in the region were largely subdued following a decline in the US dollar, although the greenback managed to hit a 20-year high against the Japanese yen.

The yen JPY= fell 0.6% to lead the losses among regional currencies. The Rupee RDI= and the South Korean won KRW=KFTC slipped 0.3% each, while the Philippine peso PHP= down 0.2%. The ringgit MYR= and the rupee RNI=IN also fell.

Growing supply constraints and prospects for growing demand from China have pushed oil prices higher, weighing on currencies in the region. WHERE

Meanwhile, the World Bank cut its forecast for global growth by almost a third to 2.9% for 2022, warning that Russia’s invasion of Ukraine had worsened the damage of the COVID-19 pandemic. 19, and many countries are now facing recession.

STRONG POINTS:

**Japan’s Q1 GDP falls less than expected due to stronger consumption –

** China to tackle export bottlenecks in a bid to boost trade –

** Indonesian 10-year benchmark yields rise to 7.101%

Asian stock indices and currencies at 07:48 GMT

COUNTRY

FXRIC

DAILY FX %

FX YTD%

INDEX

DAILY STOCKS %

INVENTORY YTD%

Japan

JPY=

-0.65

-13.77

.N225

#ASSESS!

#ASSESS!

China

CNY=CFXS

-0.04

-4.78

.SSEC

0.68

-10.33

India

RNI=IN

-0.07

-4.42

.NSEI

0.17

-5.24

Indonesia

RDI=

-0.25

-1.66

.JKSE

1.04

9.63

Malaysia

MYR=

+0.08

-5.15

.KLSE

0.05

-2.60

Philippines

PHP=

-0.14

-3.62

.PSI

0.23

-4.96

South Korea

KRW=KFTC

+0.31

-5.18

.KS11

-0.01

-11.80

Singapore

CAD=

-0.05

-1.86

.STI

-0.16

3.45

Taiwan

TWD=TP

-0.03

-6.21

.TWII

0.95

-8.50

Thailand

THB=TH

-0.10

-3.09

.SETI

0.28

-1.28

(Reporting by Tejaswi Marthi in Bengaluru; Editing by Subhranshu Sahu)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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