Emerging Markets: Thai Baht Top Underperformer Among Asian Currencies as Asian Equities Gain on Chinese Measures

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BANGKOK, May 31 (Reuters): The Thai baht dragged losses for Asian currencies on Tuesday as U.S. Treasury yields jumped and the dollar held firm after hawkish remarks from a U.S. Federal Reserve governor, while Chinese equities rebounded on further policy support measures.

Shares in China gained 1.2% after his cabinet unveiled policies including accelerating the issuance of special bonds by local governments and cash support for companies that hire college graduates.

MSCI’s broadest index of Asia-Pacific stocks outside Japan added 0.7%, reversing early-session losses and led by gains in China and Hong Kong.

Investor reaction to China’s stimulus measures announced on Monday was short-lived, offset by Fed Governor Christopher Waller’s call for a half-percentage-point hike in interest rates until until inflation is firmly under control.

Waller’s remarks preceded Fed Chairman Jerome Powell’s meeting with Chairman Joe Biden later in the day to discuss the state of the economy. US Treasury yields rose sharply to a one-week high as trading resumed after a US holiday.

With the strength of the greenback, Asian currencies lost ground. The baht fell as much as 0.5% and was the biggest underperformer in the region.

Poon Panichpibool, market strategist at Krung Thai Bank, said the baht’s move was due to factors including a firm dollar and profit taking from players who shorted the dollar- Thai baht earlier.

The rupee, Singapore dollar and Philippine peso fell 0.2% each, while the Malaysian ringgit fell 0.3%.

In equity markets, shares of Jakarta led with a 1% gain, followed by shares of Singapore and South Korea, up 0.6% each. In contrast, Philippine stocks fell 0.7%.

In a relatively light economic calendar in Asia for the week, investors were in wait-and-see mode.

In India, the focus was on GDP data due later in the day. India’s economy likely grew at its slowest pace in a year in the first quarter due to Omicron-related curbs and rapid inflation, a Reuters poll showed last week.

The rupiah fell 0.2% while Indian stocks fell 0.1%. India’s benchmark 10-year bond yield hit a three-week high in early trading on Tuesday as global crude oil prices rose further, raising concerns about the need for the bank central government to aggressively tighten monetary policy to contain inflation. -Reuter

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