Thai Baht Leads Asia FX Lower After New Russia Sanctions

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  • Currencies at half mast, firms in US dollars
  • Markets eyes India’s Q4 GDP
  • Taiwan and Indonesia markets closed for public holidays

Feb. 28 (Reuters) – Emerging Asian currencies took a hit on Monday, with the Thai baht plunging to a two-week low, after Western countries imposed a fresh round of sanctions on Russia following its invasion of Ukraine.

The Russian ruble lost nearly 30% against the dollar due to sanctions announced over the weekend, including the blocking of some Russian banks from the international payment system SWIFT, as well as the targeting of the central bank and foreign exchange reserves from Russia. Read more

The baht lost as much as 1%, extending last week’s nearly 1% decline and hitting its weakest level since Feb. 9.

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Poon Panichpibool, market strategist at Krung Thai Bank, attributed the currency’s weakness to low liquidity, soaring oil prices and a potential hit from a drop in Russian tourist numbers.

“As Thailand is a net importer of energy, I believe that if crude prices remain high or even increase from now on, it could deteriorate (Thailand’s) trade balance and reduce the current account,” he said. Panichpibool.

The data also showed Thailand’s factory output in January grew less than expected, while its unemployment rate hit its lowest level since the COVID-19 pandemic.

The Singapore dollar and South Korean won also fell 0.4% and 0.2%, respectively.

Singapore also joined many Western countries in imposing sanctions on Russia on Monday. Read more

Regional markets have seen heightened volatility over the past week as the crisis has dampened risk sentiment, sending oil prices soaring and making safe-haven assets, including the dollar and gold, more attractive to investors. investors.

“The escalation of the Ukraine crisis will force markets to price in a significantly higher geopolitical risk premium,” Westpac strategists said in a note, adding that US Federal Reserve policy tightening would remain out of reach. investors for a while.

The yuan, which has pegged regional currencies lately against the risk of steep losses amid the Fed’s hawkish stance on interest rates and policy, gained about 0.1%.

The Indian rupee reversed early gains to tumble 0.3%, deepening last week’s 0.9% loss, while stocks (.NSEI) reversed early losses and turned positive, as stocks Investors were waiting for fourth quarter GDP data.

Analysts expect the economy to have lost steam in the quarter, due to disruptions from the Omicron variant of the coronavirus.

Other stock markets in the region also rebounded. Philippine stocks (.PSI) jumped more than 1% after falling sharply last week, while Thai stocks (.SETI), which fell nearly 2% last week, rose 0.3 %.

Singapore’s FTSE Strait Times Index, however, (.STI) fell 1.3%.

Markets in Taiwan and Indonesia were closed for a public holiday.

STRONG POINTS:

**Russian bond yields closed at 12.46% on Friday as trading has yet to resume.

** Hongkong Land (HKLD.SI) and DBS Group (DBSM.SI) are the main drags among Singapore stocks

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Reporting by Harshita Swaminathan; Editing by Simon Cameron-Moore and Rashmi Aich

Our standards: The Thomson Reuters Trust Principles.

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