Most Asian FX mixed ahead of Lunar New Year; ringgit, peso outliers

Most Asian currencies took mixed positions on Friday ahead of the Lunar New Year in the region as market participants continued to weigh in on possible rate hikes by the U.S. Federal Reserve stirring global recessionary fears, while the Malaysian ringgit and Philippine peso edged higher.

On the eve of the holiday season, Chinese officials said that the worst was over in their battle against COVID-19 as China geared up for one of the busiest periods after mass travel was possible for the first time in nearly three years.

Reacting to the news, shares in Shanghai 000001 climbed 0.7%, while the Chinese yuan USDCNY continued to edge lower.

The world's second-largest economy kept its benchmark lending rates unchanged for the fifth month in a row with analysts expecting further rate cuts in the future after the central bank vowed to support the COVID-19-hit economy.

Separately, worries of more Fed tightening were aggravated by robust U.S. employment data and fresh hawkish rhetoric from central bank officials.

There are a couple of factors playing together, said Rachana Mehta, co-head, regional fixed income at Maybank Asset Management Singapore. "One is China's reopening and the other has to do with the slowdown in U.S. growth. So market participants are torn between these factors. That is what I think is driving some markets better than the others."

With the upcoming Lunar New Year, people are booking in profits before they go for their holidays, Mehta added.

The South Korean won USDKRW and Taiwan's dollar USDTWD slid 0.2% and 0.1%, respectively. The Singapore dollar USDSGD remained listless.

On the other hand, the ringgit USDMYR appreciated as much as 0.4% to hit its highest level in nine months, while the Thai baht USDTHB and Philippine peso USDPHP strengthened 0.1% each.

Thailand's consumer spending is likely to rise 13.6% to 45 billion baht ($1.37 billion) over the Lunar New Year period, a university survey showed.

"We stay optimistic on the baht as the rapid China reopening is likely to benefit Thailand from a tourism perspective and peaking Fed rates may lead to declining yields," said analysts at Maybank.

The Thai government said it expects at least five million Chinese tourists this year.

Additionally, Malaysian consumer price index (CPI) rose 3.8% in December, slightly less than forecasts.

"...We expect headline inflation to continue its downward trend towards year-end, resulting in an average inflation rate of 2.8% for the entire year of 2023," said analysts at UOB.

HIGHLIGHTS:

** Most of the regional markets will be on holiday on Jan. 23

** UPDATE 1-Philippines, U.S. in talks on holding "2-plus-2 meeting" - envoy

** UPDATE 3-Japan's consumer inflation hits fresh 41-year high, keeps BOJ in focus

($1 = 32.8500 baht)