Indonesian rupiah, Thai baht lead Asian FX up on cooling U.S. inflation

The Indonesian rupiah and Thai baht led gains among Asian peers on Monday as sentiment remained upbeat on signs of tapering in inflation and consequent hopes the Federal Reserve would slow its pace of interest rate rises.

The rupiah USDIDR marked its highest level since Sept, 20 after gaining 1% in early trade, while the Thai baht USDTHB gained for a second straight day, hitting its highest level since March 2022 in early trade

Indonesia, which enjoyed an export boom last year thanks to high commodity prices, is likely to report a narrowing trade surplus in December, according to Reuters poll.

Additionally, its central bank, Bank Indonesia (BI) will hold a monetary policy meeting this week.

"With December inflation figures rising from November, BI cannot afford to put a break on rate hikes, just yet, or even signal that to be the case as it risks undermining BI's inflation fighting efforts thus far," said analysts at Mizuho Bank said in a note.

The Malaysian ringgit USDMYR and the Philippine peso USDPHP firmed 0.6% each, while Singapore's dollar USDSGD added 0.2%.

The Chinese yuan USDCNY largely remained unchanged.

Shanghai stocks 000001 gained, still benefiting from foreign investors' buying of Chinese shares last week on optimism that China was set for a robust economic recovery from the pandemic.

But a Reuters poll showed China's gross domestic product (GDP) in the fourth quarter of 2022 likely grew only 1.8% from a year earlier as pandemic controls intensified, slowing from the third-quarter's 3.9% annual pace.

China is expected to release GDP numbers on Tuesday.

Other Asian equities remained largely upbeat as inflation concerns declined, with Philippines stocks (.PSE) gaining most, up more than 2%. Shares in South Korea KOSPI, Taiwan TAIEX and Thailand SET rose between 0.4% and 0.8%.

But stocks in Malaysia BURSA shed 0.3%, and Indonesian stocks COMPOSITE edged slightly lower.

The Japanese yen USDJPY rose to a more than seven-month peak as traders ramped up bets that the central bank could make further tweaks to its yield control policy.

Markets in the United States will be closed on Monday for a holiday.

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