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Asian currencies gain on weak dollar, renewed risk appetite

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Most Asian currencies gained on

Thursday, helped by a pullback in the U.S. dollar and the return

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of some risk appetite to markets, while Malaysia’s ringgit

traded flat ahead of a budget announcement and speculation of a

snap election.

The Thai baht rose 0.7% in its third straight

session of gains and traded at 37.180 to the dollar, and the

Singapore dollar was up 0.3%.

The greenback stregthened overnight after data showed

private employment rose more than expected in September, which

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meant the Federal Reserve would likely stick with its hawkish

stance. However, gains in the dollar pulled back in Asia morning

trade.

“(Markets) are betting that the Fed will back down on rate

hikes and pivot on rising recession risks. But the Fed appears

less inclined to swerve so quickly this time than it has on

occasion in the past 15 years,” said Vishnu Varathan, an analyst

at Mizuho Bank.

U.S. benchmark 10-year yields rose overnight by 14.4 basis

points (bps) to 3.761%. Yields in Asia followed, with Indonesian

yields up 1.2 bps to 7.213%, and Singapore’s

up 6.5 bps to 3.397%.

“We foresee the global investors to continue having

intention for reducing their position on Indonesian government

bond market as of today until tomorrow,” analysts at Maybank

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said.

The cautionary selling would come ahead of a key U.S. labor

report on Friday, they added. The jobless claims data due

overnight would be another indicator of U.S. economic strength,

and by extension, the rate of the Fed’s policy tightening.

Malaysia’s ringgit traded flat, ahead of the 2023

budget announcement on Friday.

“The issue with the ringgit is not so much the budget, but

actually the expectation that there will be a snap general

election imminently. There’s talk that the parliament could be

dissolved as as as early as tomorrow to hold the snap general

election,” said Alvin Tan, head of Asia FX strategy at RBC

Capital Markets.

Local media have reported speculation that the parliament

could be dissolved even before the budget was tabled by the

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finance minister, adding a further layer of uncertainty for

ringgit traders.

Oil prices trended higher after OPEC+, a group of

oil-exporting countries, said they would further reduce global

supply with the largest cut to production since 2020.

Analysts at Maybank said this will further complicate global

central banks’ fight against inflation.

Meanwhile, markets in South Korea enjoyed a rally on the

back of advances made by heavyweight chipmakers, with the won

rising 0.8% and the main stock index up 1.5%.

Late-day buying on Wall Street, which spilled into a rally

in U.S. equity futures, also meant the return of some

risk appetite to markets.

Stock markets in Asia traded broadly higher, with markets in

Thailand and Singapore rising 0.9% and 0.4%

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respectively. All other major stock markets in Asia also saw

gains.

Markets in China remained shut for a holiday.

HIGHLIGHTS:

** India yields rise after country’s bonds

not included in J.P. Morgan debt index, traders say

** Philippine government raises $2 bln in dollar bonds, in

the first offshore debt issue by the Marcos adminstration

Asia stock indexes and currencies

at 0213 GMT

COUNTRY FX RIC FX FX INDE STOCKS STOCKS

DAILY % YTD % X DAILY YTD %

%

Japan +0.08 -20.3 <.n2>

China 6 EC>

India -0.09 -8.90 <.ns ei>

Indonesi +0.07 -6.13 <.jk a se>

Malaysia +0.02 -10.0 <.kl se>

Philippi +0.15 -12.9 <.ps nes i>

S.Korea 9 11>

Singapor +0.32 -5.04 <.st e i>

Taiwan +0.12 -12.1 <.tw ii>

Thailand +0.71 -10.2 <.se ti>

(Reporting by Harshita Swaminathan; Editing by Kim Coghill)

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