Friday 29 Mar 2024
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BENGALURU (Dec 30): Most Asian currencies and shares were set to end the year on a positive note, having weathered through a brutal 2022, as risk sentiment improved after US data showed the Federal Reserve's aggressive rate hike path had begun to affect the labour market.

However, for the year, most currencies depreciated significantly as a strong US dollar — owing to the Fed's rate actions and elevated crude prices — hammered emerging units throughout the year.

The Indian rupee and the Philippines peso, despite clocking in marginal gains on Friday, were each set for their worst year since 2013. The Singaporean dollar was the only outlier among the pack, eking out a 0.4% annual gain.

The Indian rupee was set to emerge as the worst Asian currency in the year, having reported a double-digit decline as compared with its peers that faced single-digit falls. However, Indian shares advanced about 5% on a year-to-date basis, and were among the top gainers in Asia.

The peso fell about 8.5% for the year, while the Taiwan dollar and the rupiah slid more than 8%.

Additionally, benchmarks in Indonesia and Singapore closed more than 4% higher for the year.

For the day, the Indonesian rupiah led the gains, jumping around half a percentage, which was closely followed by the Thai baht and the Malaysian ringgit, up around 0.2% each.  

A sense of caution still prevailed among investors due to a surge in Covid-19 cases in China, while worries about a global recession due to rate hikes by major central banks — including the Fed — also weighed on sentiment.

At 0710 GMT, the dollar index, which measures the strength of the greenback against six major currencies, was at 104.9, with the safe-haven currency set for its best year since 2015.

"Despite the overnight slippage, the dollar is up 8.7% for 2022, which speaks not just to headwinds whipped up by the most aggressive Fed tightening cycle but consequent rise in recession risks," Vishnu Varathan, head, economics & strategy at Mizuho Bank said.

Other Asian equities were in a bright spot on Friday, with the Thailand index jumping the most around 0.7%, while Malaysia advanced 0.2% and Taiwan gained 0.6%.

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