BENGALURU (Sept 2): The Philippine peso touched a record low on Wednesday, while Asian stocks slid as investors fled risk assets after renewed US strikes on Iran drove up oil prices and pushed global bond yields to multi-year highs.
MSCI’s global EM currency index slipped as much as 0.2%, putting it on track for its weakest session in a month and ending a 10-session winning streak if losses persist.
Risk appetite across emerging Asia soured as investors retreated from riskier assets after oil prices rose back above US$95 a barrel following fresh US strikes on Iran.
The Philippine peso hit a record low of 62.652 per US dollar, pressured by elevated energy prices and persistent concerns over the country’s external position. The benchmark stock index fell 0.7%.
Maybank analysts said the peso was likely to remain under pressure because of its “unfavourable external position and low real rates”, with high oil prices and the prospect of increased capital goods imports likely to weigh on the currency.
Additionally, remittance flows are providing less support as growth from major source markets such as the US and Middle Eastern countries has either been modest or shown signs of slowing, the analysts added.
Caution was also evident in the region’s debt market, with benchmark 10-year bonds in Indonesia and the Philippines posting year-to-date price losses of 7.6% and 23.6%, respectively, according to LSEG data.
The sell-off has unfolded alongside a sharp rise in developed-market borrowing costs. The US 10-year Treasury yield climbed to its highest level in nearly three years, while Japan’s benchmark 10-year government bond yield moved above 3%, denting the appeal of emerging-market assets.
Elsewhere, Indonesia’s rupiah and Taiwan’s dollar weakened 0.3% each, while Thailand’s baht slipped 0.1% after earlier touching its weakest level in nearly a month. South Korea’s won bucked the broader trend to gain 0.4%.
The MSCI gauge of EM Asia equities dropped as much as 2.2% to its lowest level in more than a week, as its largest constituents, South Korea’s Kospi and Taiwan’s benchmark, fell 3.6% and 1.7%, respectively.
Indonesia’s benchmark stock index eased 0.3% after earlier touching its highest level since mid-May, while Thailand stocks fell 0.7% to an eight-week low.
Investors now await the US nonfarm payrolls report, due on Friday, for clues on whether the Federal Reserve will raise rates later this month.
Uploaded by Chng Shear Lane
