The Thai baht and Malaysian ringgit led advances among developing Asian currencies on Thursday, as the dollar fell after the US Federal Reserve hiked rates by an expected 50 basis points but lowered its rate-hike forecast.
The baht (THB=TH) rose 0.9 percent to its highest level since October 2021, followed by the ringgit (USDMYR) and the Philippine peso (PHP=), which both rose 0.4 percent and 0.1 percent. The dollar (DXY) fell to its lowest level in a month as the Federal Reserve indicated it would not consider 75-basis-point rate hikes in the future, giving market players some relief.
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However, he noted, the COVID-19 outbreak in China and lingering fears about fresh energy restrictions against Russia might stymie baht gains. Thailand’s headline inflation also rose at a slower pace than projected. In April, the 4.65 percent reading fell short of the 4.98 percent forecast. The core CPI index increased 2.0 percent from a year ago, which was in line with expectations.
Oil prices soared again as the European Union proposed more penalties against Russia, including a six-month petroleum embargo. As investors were comforted by the Fed’s position on aggressive rate rises, equities in the region were divided, with China stocks (000001) leading gains of 1.1 percent, followed by the Philippines’ (.PSI) near 1 percent advance. Malaysian (BURSA) and Singaporean (STI) stocks, on the other hand, declined.
“The inflation remains mostly supply-driven. The odds of the Bangko Sentral ng Pilipinas being raised sooner rather than later are increasing. In the second half of 2022, the first-rate hike is predicted” Barclays analysts noted. For public holidays, markets in Japan, Indonesia, and South Korea were closed.