Philippine peso keeps gains after strong GDP data, Asian shares hit 7-month high
U.S. Q4 advance GDP data due later in day
Markets shut in China, Taiwan and India
By Savyata Mishra
Jan 26 (Reuters) -The Philippine peso held onto early gains on Thursday after the country posted its fastest annual economic growth in more than four decades, while other Asian currencies strengthened against a weaker U.S. dollar.
The Philippine economy grew at a stronger-than-forecast annual rate of 7.2% in the fourth quarter due to pent-up demand following the lifting of COVID-19 restrictions.
"The above-consensus GDP growth in 2022 should give the Bangko Sentral ng Pilipinas space to tighten policy further in the first half of 2023," said Nicholas Mapa, a senior economist with ING.
"There is a need to move cautiously in an uncertain environment with the lagged effects of the aggressive tightening delivered so far," analysts at UOB analysts said.
The peso PHP= was last up 0.26%, rising 2.3% so far this year.
The Thai baht THB=TH firmed 0.3%, a day after the Bank of Thailand (BoT) lifted interest rates as expected while noting the improving growth outlook and rising concerns over demand-side inflationary pressures.
"The better growth outlook and the rising risk of demand-pull inflation would encourage the MPC (Monetary Policy Committee) to shift the policy weights to curbing inflation," BofA analysts said in a note.
The Malaysian ringgit MYR= gained 0.3%.
"China's rapid reopening is also increasing optimism for the MYR, given Malaysia's large trade position with China," Maybank analysts wrote.
The dollar index =USD held near an eight-month low against its peers as traders awaited preliminary fourth-quarter U.S. GDP figures later in the day and a slew of central bank meetings next week.
Downbeat earnings and guidance from U.S. corporates have deepened fears of an economic downturn and led investors to pare back expectations on how much longer the Federal Reserve would need to raise interest rates aggressively.
The Singaporean dollar SGD= rose 0.1%, while Indonesia's rupiah IDR= firmed 0.1% and the Japanese yen JPY= advanced 0.2%.
Singapore's December core inflation edged past expectations on Wednesday, but analysts at BofA "see little need for off-cycle move as core forecast remains credible".
Asian equities notched a fresh seven-month high, with Hong Kong shares .HSI playing catch-up to other markets' gains as trade resumed after a three-day Lunar New Holiday.
TD Securities analyst Mitul Kotecha expects emerging market assets to outperform in the coming months due to "cheaper valuations, softer USD, peak Fed rates pricing, lower UST yields and China reopening".
Seoul shares .KS11 climbed 1.7%, with automakers leading the gains ahead of their earnings releases, while Jakarta .JKSE and Singapore .STI stock benchmarks rose 0.4% and 0.6%, respectively.
Kuala Lumpur .KLSE and Philippine shares .PSI were down 0.2% each, while Thai shares .SETI fell 0.3%.
HIGHLIGHTS:
** South Korean consumers' inflation expectations inched up in January, with sentiment towards economic conditions and the outlook also improving
** The Philippines posted a trade deficit of $4.6 billion for December PHTBAL=ECI, the biggest trade gap in three months, government data showed
** Malaysian palm oil futures inched higher, while a stronger ringgit, weakness in related oils and disappointing export data weighed on sentiment
** Singapore 5-year yields SG5YT=RR were down 2.4 bps
Asia stock indexes and currencies at 0650 GMT | ||||||
COUNTRY | FX RIC | FX DAILY % | FX YTD % | INDEX | STOCKS DAILY % | STOCKS YTD % |
Japan | JPY= | +0.28 | +1.45 | .N225 | -0.12 | 4.86 |
China | CNY=CFXS | - | +1.54 | .SSEC | - | 5.68 |
India | INR=IN | - | +1.38 | .NSEI | - | -1.18 |
Indonesia | IDR= | +0.13 | +4.18 | .JKSE | 0.43 | 0.13 |
Malaysia | MYR= | +0.33 | +3.65 | .KLSE | -0.24 | 0.02 |
Philippines | PHP= | +0.26 | +2.32 | .PSI | -0.18 | 7.65 |
S.Korea | KRW=KFTC | +0.08 | +2.75 | .KS11 | 1.65 | 10.38 |
Singapore | SGD= | +0.16 | +2.20 | .STI | 0.57 | 3.71 |
Taiwan | TWD=TP | - | +1.12 | .TWII | - | 5.62 |
Thailand | THB=TH | +0.28 | +5.99 | .SETI | -0.34 | 0.47 |
Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
Asian stock marketshttps://tmsnrt.rs/2zpUAr4
Reporting by Savyata Mishra in Bengaluru; Editing by Subhranshu Sahu
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