Asian currencies hit by rising global rates, recession risks



*

South Korean won, shares lead losses

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Thai baht lingers at over 16-yr low

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BoT expected to deliver 25 bps rate hike - Reuters poll

By Upasana Singh

Sept 28 (Reuters) - Worldwide ructions in financial markets swept up Asian emerging economies, with most of their currencies down on Wednesday as the U.S. Federal Reserve's ever more hawkish policy tightening stance to fight inflation raised global recession risks.

As many developed economies grappled with the prospects of further rate hikes, and the sterling remained under fire due to large unfunded UK tax cut plans, the dollar strode to near a two-decade high, leaving the likes of the Thai baht struggling at more than 16-year lows.

The rising borrowing costs globally have added to pressure across emerging market currencies, raising the risk of larger hikes in these countries to fight inflation and reduce the premium offered by dollar-based assets.

The Bank of Thailand (BOT) is expected to deliver another 25 basis point rate hike later in the day - even as many of its peers opt for larger increases to fight rising prices, a Reuters poll showed.

"The ongoing market adjustment for a more aggressive Fed's policy outlook continues to weigh on the region," said Yeap Jun Rong, market strategist at IG.

The Thai baht THB=TH , which has lost nearly 12% this year, fell 0.3% and lingered at its lowest level since July 2006.

Inflation in Southeast Asia's second-largest economy jumped to a 14-year high in August, and a weaker currency has exacerbated the price pressures by raising the cost of imports. Stocks in Bangkok .SETI dropped 0.8%.

Elsewhere, Singapore's dollar SGD= and Malaysia's ringgit MYR= weakened 0.5% and 0.2%, respectively, while South Korea's won KRW=KFTC led losses in the region as it depreciated 1.2% to hit a more than 13-year low.

The broad rally in the U.S. dollar meant few of its rivals escaped unscathed. The dollar index =USD gained 0.4% to 114.56, near to its top of 114.58 hit on Monday.

Indonesia's rupiah IDR= , among the best performing currencies in Southeast Asia, weakened 0.7%, while equities in Jakarta .JKSE were flat.

"We expect USDIDR to climb to fresh multi-year highs, reflecting near-term headwinds from broad dollar strength and a deteriorating current account position over the medium term," analysts at Barclays said in a note.

However, Bank Indonesia has continued with its "triple intervention" to guard against excessive falls in the rupiah exchange rate, an official said.

Over in China, the yuan CNY=CFXS slipped 0.6%, the weakest since the global financial crisis in 2008, even as the country's central bank on Monday announced fresh steps to slow the pace of the yuan's recent depreciation by making it more expensive to bet against the currency.

The Philippine peso PHP= was the only bright spot among the region's currencies as it managed to eke out a 0.1% gain. However, the country's benchmark index .PSI dropped 1.2%.

In stock markets, equities in Seoul .KS11 slipped 2.8% and led declines. Stocks in Singapore .STI and Kuala Lumpur .KLSE retreated 1.3% and 0.5%, respectively.

HIGHLIGHTS:

** Thai govt plans $21.6 bln in new borrowing in 2023 fiscal year

** Indonesia, Malaysia c.banks renew local currency swap arrangement

** China prepares to tweak yuan fixing process to slow its fall - source

The following table shows rates for Asian currencies against the dollar at 0358 GMT. COUNTRY FX RIC

FX

FX INDE STOCKS STOCKS

DAILY % YTD %

X DAILY YTD %

% Japan

JPY=

+0.06 -20.4 <.N2 -2.25 -9.63

5 25>

China

<CNY=CFXS

-0.60 -12.0 <.SS -0.75 -15.64

>

2 EC>

India

INR=IN

-0.37 -9.22 <.NS -0.80 -2.79

EI>

Indonesi IDR=

-0.72 -6.43 <.JK

0.01

8.08 a

SE>

Malaysia MYR=

-0.17 -9.81 <.KL -0.52 -10.46

SE>

Philippi PHP=

+0.14 -13.5 <.PS -1.24 -16.53 nes

7 I>

S.Korea <KRW=KFTC

-1.22 -17.3 <.KS -2.77 -27.38

>

9 11>

Singapor SGD=

-0.53 -6.75 <.ST -1.26

0.06 e

I>

Taiwan

TWD=TP

-0.28 -13.1 <.TW -1.83 -25.49

1 II>

Thailand THB=TH

-0.30 -12.3 <.SE -0.75 -3.57

0 TI>


Reporting by Upasana Singh in Bengaluru Editing by Shri Navaratnam

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