EMERGING MARKETS-Philippine peso, Indonesian rupiah defensive as stocks rally

EMERGING MARKETS-Philippine peso, Indonesian rupiah defensive as stocks rally

Reuters  | Jul 01, 2020 12:30

EMERGING MARKETS-Philippine peso, Indonesian rupiah defensive as stocks rally

* Graphic: World FX rates http://tmsnrt.rs/2egbfVh
* Graphic: Foreign flows into Asian stocks https://tmsnrt.rs/3f2vwbA
* Indonesian rupiah down for fifth session, up 13% in Q2
* Philippine peso depreciates in wake of falling yields

By Rashmi Ashok
July 1 (Reuters) - The Philippine peso and Indonesian rupiah
underperformed Asian peers on Wednesday as falling local yields
and pressure on the currencies from rate cuts dented their
appeal, keeping them from enjoying broader gains fuelled by
upbeat Chinese data.
The peso PHP= eased 0.2% against the dollar, while stocks
in the country .PSI slipped 1% and were on course for a
third-straight week of losses.
Philippine 10-year bonds PH10YT=RR saw yields dive half a
percentage point at the start of the week to 2.8% and have clung
to similar levels since, after the central bank unexpectedly cut
interest rates by 50 basis points to a new low last week.
While the rate cut - the fourth this year - sapped gains in
the peso, demand for Philippines' bonds was still unaffected,
with a fresh auction on Monday being oversubscribed.
"Investors must come to terms with the lower yields in their
global hunt, keeping in mind that such an environment is
supportive of the fiscal financing needed to tackle the economic
effects of COVID-19," said Han Tan, market analyst at FXTM.
"Despite the recent yield drop, the Philippines still offers
higher yields compared to South Korea, Thailand, and Taiwan on
the 10-year benchmarks."
In Indonesia, inflationary concerns lingered after the
government on Monday said Bank Indonesia (BI) would buy low
yielding bonds, including those with zero yield, to finance a
ballooning fiscal deficit caused by spending to fight the
pandemic. The rupiah IDR= fell 0.5%, declining for the
fifth-straight session. Still, the currency was the top gainer
in the region in the second quarter of 2020 by a wide margin,
appreciating 13%.
Bank Indonesia's purchases may stabilise the bond market,
but may undermine its main policy goal of rupiah stability if
debt monetization risks take hold or credit rating risks
surface, analysts at Mizuho wrote in a note.
Elsewhere, Asian equities clocked modest gains, finding
support from a private survey that showed China's factory
activity grew at a faster clip in June after the government
lifted coronavirus lockdown measures. A positive session on Wall Street overnight and a survey
showing U.S. consumer confidence rebounded in June as businesses
reopened also helped, with Singapore .STI , Taiwan .TWII and
South Korean .KS11 stocks adding around 1% each.

** Singapore STI's .STI top gainers included SATS
SATS.SI and Venture Corp VENM.SI up 2.1% each.
** Top gainers on the Thailand's SETI .SETI include Thai
OPP TOPP.BK up 14.8% and Asia Precision APCS.BK rising 13.2%
** Thailand's 10-year government bond yields were up 5 basis
points at 1.27%​​ while 3-year yields rose 2 basis points
to 0.6%​​.

Asia stock indexes and
currencies at 0336 GMT
% %
Japan JPY= +0.19 +0.83 .N225 -0.19 -5.96
China .SSEC 0.83 -1.34
India INR=IN +0.00 -5.46 .NSEI 0.00 -15.34
Indones IDR= -0.49 -2.60 .JKSE -0.24 -22.32
Malaysi MYR= +0.07 -4.44 .KLSE 0.03 -5.49
Philipp PHP= -0.19 +1.64 .PSI -0.80 -21.21
S.Korea .KS11 0.79 -3.31
Singapo SGD= -0.01 -3.51 .STI 0.74 -19.04
Taiwan TWD=TP +0.67 +2.18 .TWII 0.85 -2.31
Thailan THB=TH -0.13 -3.30 .SETI 0.53 -14.80

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
Write a reply...
Please wait a minute before you try to comment again.

Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

English (USA) English (UK) English (India) English (Canada) English (Australia) English (South Africa) English (Nigeria) Deutsch Español (España) Español (México) Français Italiano Nederlands Português (Portugal) Polski Português (Brasil) Русский Türkçe ‏العربية‏ Ελληνικά Svenska Suomi עברית 日本語 한국어 简体中文 繁體中文 Bahasa Indonesia Bahasa Melayu ไทย Tiếng Việt हिंदी
Sign out
Are you sure you want to sign out?
Saving Changes


Download the Investing.com App

Get free real time quotes, charts and alerts on stocks, indices, currencies, commodities and bonds. Get free top of the line technical analysis/predictors.

Investing.com is better on the App!

More content, faster quotes and charts, and a smoother experience is available only on the App.