Most emerging Asian currencies softened as investors remained wary of a fallout from debt-laden property developer China Evergrande, while Philippine shares outpaced regional peers after a dovish stance from the country’s central bank.
Evergrande bondholders were spooked by worries that the company was inching closer to a potential default as an interest payment deadline expired on Thursday without any announcement from the company.
The reaction in FX markets was timid, however, partly due to reports that Chinese regulators had issued instructions to Evergrande to help it avoid a near-term default on dollar bonds.
The reports suggest “the government has officially broken its silence on the issue and is in the process of ensuring the issue gets resolved without wider repercussions on financial/social/economic stability,” analysts at Maybank said in a note.
The yuan was a tad weaker on Friday, while Indonesia’s rupiah and the Philippine peso edged 0.1 percent and 0.2 percent lower, respectively.
Manila’s benchmark index climbed as much as 1 percent and headed for its fourth straight day of gains after BangkoSentral ng Pilipinas (BSP) on Thursday looked past increasing inflation pressures to keep its monetary policy loose.
The central bank raised its average inflation forecasts for 2021 through 2023 but expects inflation to ease to 3.3 percent next year from a forecast of 4.4 percent this year.
“With headline inflation slowly returning to BSP’s inflation target band of 2 percent-4 percent… and slow vaccination progress likely to weigh on activity through year-end, we expect BSP to keep the policy stance accommodative for the rest of the year,” Goldman Sachs analysts said.
Singapore’s FTSE Strait Times index gave up 0.3 percent, while South Korea’s Kospi fell as much as 0.2 percent, after daily COVID-19 cases hit record highs in both nations.
Singapore, which has inoculated more than 80 percent of its population, has seen a spike in cases recently after it relaxed some curbs, prompting it to pause further reopening.
