EMERGING MARKETS-Asian emerging currencies fall on firm dollar; stocks ease

By Rishav Chatterjee

Nov 7 (Reuters) – Emerging Asian currencies and equities fell on Tuesday, with South Korea’s stocks and the won leading the losses against a rising US dollar, as the rally over interest rates peaking lost steam.

The ringgit in Malaysia MYR= slipped 0.8% and the share market in Kuala Lumpur .KLSE dipped 0.3%.

The country’s industrial production in September fell 0.5% from a year earlier, more than expected, government data showed on Tuesday.

Bank Negara Malaysia at its last policy meeting held interest rates stable unlike the Philippines and Indonesia.

“We continue to expect no further policy rate hikes (in Malaysia) – and with the policy rate not obviously restrictive, we do not expect cuts either, even in 2024,” said analysts at Barclays.

The South Korean won KRW=KFTC fell 0.8% against the dollar, snapping a three-day winning streak, while stocks in Seoul .KSII were down 2.3% after four consecutive sessions of gains.

South Korea on Sunday re-imposed a ban on short-selling shares, at least until June, starting Monday. The ban had helped shares to rally.

“Korean stocks were the underperformers today, with some of the initial enthusiasm from the extension of the short-selling ban appearing to wear off today,” said Tim Waterer, market analyst at KCM Trade.

“So, in some respects, the Kospi was giving back some of Monday’s impressive gains with traders in a more circumspect mode today,” he added.

Analysts at Citi expect “tight liquidity” conditions to persist in the fourth quarter in South Korea.

Elsewhere, the Indonesian rupiah IDR= eased 0.5%. Stocks in Jakarta .JKSE fell 0.8%.

Indonesia on Monday reported solid economic growth in the third quarter, although its pace eased more than expected to its weakest in two years.

“Recent rupiah stabilization reduces the need for another Bank Indonesia rate hike in the near term, which now seems more likely to materialize in the first quarter of 2024, though this is a close call,” Barclays analysts said in a note.

The rupiah’s depreciation has slowed over the past two weeks, with the currency strengthening back to early October levels following the Federal Reserve meeting on Nov. 1, said Maybank in a note.

The US dollar, which measures itself against a basket of currencies was last trading 0.3% higher at 105.5.

Among other countries, annual inflation in the Philippines slowed for the first time in three months in October mainly due to slower increases in food prices, data showed.

The inflation print will likely ease pressure on the central bank, which meets next on Nov. 16, to decide on its monetary policy. Another deciding factor will be Thursday’s economic growth data.

The peso PHP= was trading 0.3% lower while stocks in Manila .PSI gained 0.9% to touch a two-week high.

In contrast to South Korea, the Philippine stock exchange launched its short selling program on Monday.

“This is the culmination of extensive efforts on the part of the stock exchange launching its securities financing solution that provides a short-selling infrastructure to market participants,” said Stephen Howard, CEO of Pan Asia Securities Lending Association.

Elsewhere in the region equities were trending lower, with stocks in Singapore .STI and India .NSEI falling 0.2% and 0.1%.

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