The Thai baht dominates Asian currencies; Philippine peso slides as inflation falls

BENGALURU (4 Feb): Most Asian currencies strengthened on Friday (4 Feb) against an overall weaker US dollar, with the Thai baht outperforming its peers at the end of a week in which trade was largely moderated by Lunar New Year holiday.

The Philippine peso was an outlier, weakening 0.1% after data showed inflation eased in January from the previous month, prompting the country’s central bank to say it would remain patient on the political levers.

“PHP (the peso) is likely reacting to dovish statements by Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno after the inflation report,” said Nicholas Mapa, senior economist at ING.

However, its benchmark rose 1%, outperforming most of its peers.

Otherwise, the baht led the way, firming 0.6% against a US dollar whose index against other major currencies fell 2% this week – its biggest weekly decline since March 2020.

“The main contributor to the strength of the THB (the baht) of late has been the fall in the USD (US dollar), which continued to decline on the somewhat surprising hawkish tone of the ECB (European Central Bank) yesterday. evening (Thursday),” Poon Panichpibool, market strategist at Krung Thai Bank, said.

“The market seems to be back in risk mode,” Panichpibool added.

The country’s consumer price index hit a nine-month high, but the Commerce Ministry said inflation was not alarming and would not yet require government action.

Sentiment was also bolstered by the Thai government’s decision earlier this week to invite back fully vaccinated tourists in its latest bid to revive the Covid-19 pandemic-ravaged tourism sector, a key driver of the country’s economy.

The South Korean won rose 0.8% after the country’s inflation hit its highest level in a decade, bolstering the case for further interest rate hikes this year.

South Korean stocks rose 1.6%, posting their best weekly gain in nearly a year, following strength in US stock futures.

Other major Asian currencies made marginal gains, with the Singapore dollar and ringgit strengthening by 0.1% each.

Strong points:

  • Indonesian benchmark 10-year yields rose 1.09 basis points to 6.454%​​
  • LG Chem climbed 0.9% and Naver advanced 1.6% to boost KOSPI