South Korea’s equities jumped 0.4 percent on strong foreign buying, which helped the won rebound. The currency ended the week up 0.1 percent.
Shanghai stocks fell 1.1 percent, finishing the week lower for the first time in 1-1/2 months, after the United States put investment and export restrictions on dozens of Chinese firms, escalating tensions between the world’s top two economies.
Equity markets in Thailand, India, Jakarta and the Singapore followed suit, down about 0.4 percent to 1.3 percent.
Most Asian currencies eased on Friday as hawkish global central banks piled pressure on emerging market assets, with the rupiah leading losses a day after Bank Indonesia stood pat on interest rates.
The Malaysian ringgit, Singapore’s dollar and the Philippine peso traded flat to lower, though most other currencies recouped earlier declines as the greenback lost some ground at the start of European trading session.
The Bank of England surprised markets on Thursday to become the first major central bank to raise interest rates since the beginning of the pandemic. A day before, the US Federal Reserve had hinted at a faster bond tapering, potentially leading to three rate hikes in 2022.
However, Asian central banks are in no rush to tighten policy as inflation pressures in the region are not as severe and the economic recovery is still at a nascent stage, with BI signaling on Thursday it would not hike rates to match the Fed.
“In the medium term, the drivers for a bullish US dollar remain intact as the Fed is going to start the hiking cycle maybe as early as March,” Citi analysts wrote in a note.
Prior going into Fed lift-off, emerging market currencies and debt typically do not perform well, they added.
