Most Asian currencies firmed against a weak dollar on Friday, with the Philippine peso and the Indonesian rupiah leading gains, while stocks fell as dull US manufacturing activity data reaffirmed the possibility of higher interest rate hikes.
The Philippine peso, which lost 8.5 percent so far this week, appreciated 0.9 percent in its fifth session of gains, after the central bank said it will hike interest rates this month, although the board could likely be split over the quantum of the hike.
The Philippine benchmark emerged as the top loser across Asia, tumbling 3.6 percent and on track for its worst week in nine as prospects of further monetary tightening sapped risk sentiment.
Analysts at Barclays expect “significant monetary policy tightening” to hurt growth next year with a lag, forecasting a 4.5 percent growth in 2023, down from 6.6 percent seen this year as inflationary pressures and macro headwinds bite.
Separately, the Philippines’ central bank governor voiced caution over the transparency of a potential sovereign wealth fund, which will serve as another source of liquidity for development projects and expected to be overseen by President Ferdinand Marcos Jr.
In Indonesia, rupiah extended gains to a third day with a nearly 1 percent jump. The unit was poised for its best week since November 2020 after inflation data on Thursday showed some signs of cooling, but stayed above the central bank’s target range of 2 percent to 4 percent.
The Malaysian ringgit firmed 0.2 percent, adding nearly 2 percent in value this week, while stocks dropped 0.7 percent and snapped a two-day winning streak.
Markets are looking forward to an update on cabinet line-up later in the day from Prime Minister Anwar Ibrahim, who was appointed as premier by the country’s king last week after an election saw no winning candidate.
Stocks in Jakarta lost 0.1 percent, tracking their worst week since mid-October.
