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Asian currencies extended losses on Friday as the U.S. dollar soared for six months after a series of strengthening economic data rekindled fears that the Fed will continue to raise interest rates in the future.
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On the other hand, the Malaysian ringgit (USD/MYR) led the day's losses among other Southeast Asian countries, falling by 0.6% and hitting its lowest decline in more than a month. So far, down as much as 2.3% in a week, this decline has been recorded as the sharpest decline since the beginning of the pandemic. Meanwhile, the Singapore dollar (USD/SGD) and the Indian Rupee (USD/INR) also experienced the same thing as the Malaysian Ringgit. They fell by 0.2% and 0.1%, respectively, and both marked their lowest levels since Jan. 6. According to analysts at ANZ, the rally in the local market stopped as the dynamics of stronger-than-expected American inflation growth struck have revived concerns over the extended rate hike cycle.
According to his analysis, these conditions are not enough to thwart the performance of the local market in a more durable way. That compares with a forecast of a 3.5% YoY increase in a Reuters poll and revised growth to around 4.6% in the September quarter. Quarter after quarter, the economy unexpectedly contracted. According to an analysis by a market strategist at Krung Thai Bank, Poon Panichpibool, a weaker-than-expected GDP reading could prompt some foreign investors to reduce their long positions or take profits, especially when their FX gains have been reduced by about 50% lately from a sharp depreciation in the baht.
The traditional economy is considered to be in recession if GDP contracts for two consecutive quarters, but Thailand's planning agency said that growth will rebound in January-March due to help from strengthened tourism activity. Poon said that foreign tourism will help mitigate the impact of weak exports. With the influx of foreign tourists from China, it is likely to drive more tourism revenue from the second quarter. Equities in the Philippines, PSEI slumped about 0.9% marking their worst day in two weeks, while stocks in Thailand (SET) and Singapore (IMS) also fell as much as 0.4% each.
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