EMERGING MARKETS-Inflation woes pressure Asian FX, stocks; Indian rupee hits record low

By Harshita Swaminathan

May 12 (Reuters) – Asian currency and equity markets saw broad-based selling on Thursday, as investors worried over sky-high U.S. inflation data solidifying the case for the Federal Reserve’s planned policy tightening, with the Indian rupee hitting a record low.

The rupee INR=IN fell as much as 0.5% to trade at 77.63 to the dollar, its second record low in less than a week. The Philippine peso PHP= also fell 0.5%.

India is also expected to report retail inflation data later in the day, with a Reuters poll expecting it surge to an 18-month high. nL3N2WY21A

“The impact we are seeing is not specifically led by the domestic factors, because if you see, globally, this inflation concern is still there. And I think yesterday’s CPI number has provided that trigger,” said Gaurang Somaiya, an analyst at Motilal Oswal.

He added that the rupee is likely to remain under pressure as long as the global inflation theme remains, and higher crude oil prices drive up oil import bills, despite the Indian central bank’s effort to keep volatility at bay.

The Philippine peso fell even as data showed its economy expanded 8.3% in the first quarter, its fastest growth in three. nL2N2X404B

“With GDP now back to pre-COVID levels and with inflation accelerating, we fully expect (the Philippine central bank) to hike policy rates at the May 19 meeting next week,” said analysts at ING. Focus is now on the details of incoming President Ferdinand Marcos Jr’s economic team. nL2N2X22H6

U.S. inflation in April saw a slight decline to 8.3%, but remained “unacceptably hot”, according to analysts at DBS. The number still came in above market expectations, causing choppy trade on Wall Street overnight. .N

The dollar index .DXY strengthened 0.2%, on the prospect of further rate hikes by the Fed, and inflows from safe-haven demand, according to Maybank analysts, which further weighed on Asian currencies.

The Singapore dollar SGD= and Malaysian riggit MYR= shed about 0.3% each, with the ringgit hitting its lowest level since April 2020. The Thai baht THB=TH was also 0.2% lower, after touching its lowest level since May 2017.

Taiwan’s currency TWD=TP and stock market .TWII also retreated 0.4% and 2.4%, respectively, after its central bank flagged it may cut its economic growth forecast, given pressures from the Ukraine war and worsening of the pandemic. nL2N2X4034

Among equities, Indonesian shares .JSKE were the biggest decliners, falling for a fourth straight session. The benchmark index was down 3%, and has lost 8.4% in the last four sessions.

South Korean stocks .KS11 shed 1.6%, while the won KRW=KFTC slid over 1% to its lowest level since March 2020. KRW/

All other major stock indices in the region were also in the red.

HIGHLIGHTS:

** Indonesia bond yields ID10YT=RR fall 13 basis points to 7.406%

** Sri Lankan President to appoint new prime minister and cabinet this week following the previous prime minister’s resignation earlier this week nL3N2X338Z

** Chinese property developer Sunac 1918.HK misses $742 million offshore bond payment, doesn’t expect to make payments coming due on other bonds nL2N2X400U

(Reporting by Harshita Swaminathan; Editing by Rashmi Aich)

((Harshita.Swaminathan@thomsonreuters.com))