Thai baht gains on quarantine-free travel hopes; Asia FX gains



By Nikhil Nainan

BENGALURU, Jan 18 (Reuters) - Thailand's baht rose on Tuesday on hopes that the tourism-reliant country waives quarantine for vaccinated visitors again, while its emerging market peers gained on a U.S. dollar unperturbed by a rise in Treasury yields.

Treasuries rose along the curve during Asia hours, with two-year yields US2YT=RR , which track short-term rate expectations, crossing 1% for the first time since Feb. 2020, as investors brace for a more hawkish Federal Reserve.

Emerging Asian stock markets were mostly higher, though barring China .SSEC and the Philippines .PSI , gains were largely capped to below half a percent.

Investors are eyeing the Fed's Jan. 25-26 meeting following a chorus of hawkish statements by officials in recent weeks. While markets do not expect an interest rate hike next week, bets are growing that the central bank will start tightening in March.

In Thailand, the government is considering bringing back a quarantine waiver for vaccinated visitors, its health minister said. If approved, the waiver could begin by Feb. 1, he added.

"Expect the baht to benefit from this feel-good development," analysts at OCBC said.

The baht THB=TH gained as much as 0.7% early on to its highest level since Nov. 22 last year, before paring much of those gains to trade 0.3% higher. Stocks .SETI also briefly scaled a 2019-high.

"This push may well be speculative, as there are still no signs that tourist inflows will return in sufficiently large numbers to justify sustained baht appreciation," OCBC added.

Stocks in Shanghai .SSEC climbed 1%, a day after better-than-expected economic growth in the fourth quarter was partly overshadowed by weak retail sales. The central bank had also cut a key lending rate and analysts expect more to come.

China's top economic planner said on Tuesday that policymakers will quickly roll out more measures to boost demand.

"The biggest downside risk to the market's view on Fed hikes lies with China," Eugene Leow, a senior rates strategist at DBS said, referring to headwinds facing the world's second-largest economy.

"While GDP growth did surprise on the upside and the PBoC have taken steps to ease liquidity and cut policy rates, there is still significant stress in property credits."

In South Korea, the won KRW=KFTC advanced 0.4% while stocks .KS11 dropped 0.3%. Retail subscriptions open for LG Energy Solution's $10.8 billion initial public offering and close on Wednesday.

Philippine shares .PSI regained most of the last two sessions' losses, gaining 1% with Aboitiz Power AP.PS up the most.

Central banks in Malaysia and Indonesia end will conclude two-day policy meetings on Thursday, though no change in policy is expected.

Markets in Malaysia were closed for a holiday.

HIGHLIGHTS:

** Indonesian 10-year benchmark yields up 1 basis points at 6.398%

** JG Summit Holdings Inc JGS.PS and International Container Terminal Services Inc ICT.PS were also among the top gainers in the Philippines

** The Bank of Japan upgraded its inflation forecasts and maintained its ultra-loose monetary policy

Asia stock indexes and currencies at 0334 GMT COUNTRY

FX RIC

FX

FX

INDEX

STOCKS STOCKS

DAILY YTD %

DAILY YTD %

%

%

Japan

JPY=

-0.24 +0.18 .N225 0.85

-0.76 China

CNY=CFXS +0.21 +0.21 .SSEC 1.01

-1.71 India

INR=IN

+0.00 +0.12 .NSEI 0.00

5.50 Indonesia

IDR=

+0.03 -0.42 .JKSE -0.60 0.36 Malaysia

MYR=

-

-

.KLSE -

- Philippines PHP=

-0.21 -0.70 .PSI

0.98

2.42 S.Korea

KRW=KFTC +0.42 +0.08 .KS11 -0.28 -3.22 Singapore

SGD=

+0.09 +0.16 .STI

0.27

5.55 Taiwan

TWD=TP

+0.15 +0.40 .TWII 0.09

1.77 Thailand

THB=TH

+0.30 +1.34 .SETI 0.29

1.45
Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Kim Coghill

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