Thai Baht, Indian Rupee Lead Asian Currencies Higher, Stocks Rebound

  • Thai baht sees worst week in a month
  • Singapore stocks rise 4%, but head for worst week in 9 months
  • Philippines closed for holidays

Feb 25 (Reuters) – Currencies and stocks in emerging markets across Asia rallied on Friday, following a broad global rally after Russia’s invasion of Ukraine sent global asset prices tumbling another day early, though the sentiment was still cautious.

The Thai baht and Indian rupee led the gains among their peers, even as oil prices jumped nearly 3% amid evolving geopolitical risks.

However, the baht, which has outperformed all currencies in the emerging Asian pack so far this year, had its worst week in a month.

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“I think the baht has now become a barometer of emerging market currencies and its rebound suggests investors are likely buying dips,” said Margaret Yang, Singapore-based strategist at DailyFX.

Meanwhile, investors will be watching closely as US Federal Reserve officials begin to provide updates on how the ongoing conflict in Ukraine could impact the economy and their planned shift to tighter monetary policy. Read more

Yang expects central banks to refrain from raising rates too aggressively in a bid to strike a balance between managing heightened geopolitical tensions and high inflation.

“Central banks in developed Asia are likely to tighten policies amid the risk of second-round effects amid an already strengthening economy, while central banks in emerging Asia are likely to give priority to still weak growth,” Nomura analysts said.

Meanwhile, TD Securities analysts expect Asia to remain a relative “safe haven” by comparison.

“The risk of a strong inflationary shock (especially on energy) will further increase the risk of tightening for central banks in emerging markets.”

The Singaporean dollar strengthened by 0.3%, while the South Korean won and the Taiwanese dollar bucked the trend falling 0.1%.

Asian stocks followed positive indices from Wall Street’s overnight session to climb higher, with Indian stocks leading the gains among their peers.

South Korean (.KS11), Singaporean (.STI), Indonesian (.JKSE) and Thai (.SETI) stocks gained around 1%, while Malaysian (.KLSE) stocks jumped 1.7%.

Singapore’s index fell more than 4% in the previous session, putting it on track for a weekly loss of 3.6%, its worst week in more than nine months. Kuala Lumpur shares were heading for their biggest weekly loss since January 21.

Analysts expect a sustained rise in oil and food prices to bode ill for Asian economies. Nomura analysts see the currencies of oil importers India, Thailand and the Philippines depreciating the most while the Indonesian rupiah will benefit from rising commodity prices.

Strong points:

**Indian stocks rose 3% during the session, forecast for a weekly decline of 3.1%, the worst week in five

**Indonesian benchmark 10-year yields are up 1.2 basis points to 6.528%​​

** Indonesian rupiah, Malaysian ringgit up 0.1%

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Reporting by Savyata Mishra in Bangalore; Editing by Sam Holmes

Our standards: The Thomson Reuters Trust Principles.

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