EMERGING MARKETS-Asian currencies steady after Fed unveils taper

  • 11/4/2021
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* Chinese yuan rises 0.2% * South Korean stocks rise 0.5% By Indranil Sarkar Nov 4 (Reuters) - Most Asian currencies held steady on Thursday after the U.S. Federal Reserve said it would not rush to raise interest rates but approved plans to start unwinding its stimulus programme, while China"s yuan touched a near one-week high. The Fed announced on Wednesday that it would trim its bond buying by $15 billion a week from this month, while leaving open the option to quicken or slow the pace as needed, but signalled it would stay patient before raising borrowing costs. The yuan < CNY=CFXS> firmed 0.2% high, reflecting broad dollar weakness in global markets sparked by a dovish tone seen in the Fed"s policy statement. "The Federal Reserve finally accepted the economy has made enough progress to start slowing the rate of Quantitative Easing (QE) purchases," analysts at ING wrote in a note. "The economy is re-accelerating and inflation will hit 6%, meaning that pressure on the Fed to end QE early and hike rates will undoubtedly grow." The Thai baht, Taiwan dollar and Philippine peso were all largely flat. South Korean stocks rose 0.5% after falling about 1.4% on Tuesday, buoyed by technology giants Samsung Electronics and peer SK Hynix climbing 1% and 1.9% respectively. The won slipped 0.1%. Share markets across the Asia Pacific firmed on Thursday following the Fed"s decision, which analysts say could feel the pain of the taper decision more than other regions. "If, as expected, the U.S. dollar rally continues, and U.S. yields rise,...(it) could lead to a burst of imported inflation if the region’s central banks choose not to spend foreign currency reserves defending their currencies." Jeffrey Halley, Senior Market Analyst, Asia Pacific at OANDA said. Stock markets in Singapore, Malaysia and India were closed on Thursday due to a holiday. Investors are now awaiting a Bank of England policy decision later in the day which may kick off a rate hike cycle with uncertain implications for debt markets globally. HIGHLIGHTS ** Indonesian 10-year benchmark yields are up 1.3 basis points at 6.2%​​ ** Singapore"s 10-year benchmark yield is up 9 basis points at 1.8% ** Malaysia, Singapore and India on holiday Asia stock indexes and currencies at 0437 GMT COUNTRY FX FX FX INDEX STOCKS STOCKS RIC DAILY YTD DAILY YTD % % % % Japan -0.15 -9.56 <.N225 0.77 8.40 > China > India > 0 Indonesi -0.14 -1.92 <.JKSE 0.82 10.48 a > Malaysia +0.00 -3.18 <.KLSE 0.00 -5.89 > Philippi +0.01 -5.13 0.02 0.65 nes S.Korea > Singapor -0.10 -2.08 0.00 13.22 e Taiwan > Thailand > (Reporting by Indranil Sarkar in Bengaluru; Editing by Kim Coghill)

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