HANOI, Oct 17 (Reuters): Most emerging Asian currencies fell on Monday, after last week's red-hot US inflation print reinforced fears of a global recession on assumptions of a persistent aggressive stance by the Federal Reserve.
South Korea's won, Indonesian rupiah, and Malaysia's ringgit were among the top losers, weakening between 0.3% and 0.5%, while Singapore's dollar, India's rupee and Thailand's baht were slightly weaker.
Vietnam's central bank effectively devalued its currency by widening the exchange rate trading band to 5.0% from 3.0%, following a sharp fall in the currency on global market jitters. The dong was down 0.66% to a record low of 24,232 per dollar, as at 0628 GMT.
With the Fed expected to stay on its aggressive rate hike path, markets are now fully expecting the US central bank to hike rates by 75 basis points (bps) next month, and likely by the same quantum again in December.
Investors also kept a nervous eye on UK bonds now that the Bank of England's (BoE's) emergency buying spree is over.
Singapore recorded a 3.1% rise in its non-oil domestic exports in September which was slower compared with last month and missed forecasts due to declines in shipments for the Chinese and Hong Kong markets.
"Notwithstanding the impressive robust NODX performance to date, the cracks in the export outlook is getting more visible," Alvin Liew, senior economist at Singaporean bank UOB, said in a research note.
"The worsening electronics performance, and increasingly weaker demand from North Asian economies, especially China, are clearly weighing negatively on NODX momentum and manufacturing demand."
Baht, which is currently hovering near a 16-year low level, was in line with regional peers and the country's economic fundamentals, the Bank of Thailand's Assistant Governor Piti Disyatat said in a meeting.
The central bank expects Thailand, South-East Asia's second-largest economy, to continue to recover this year and next year, with gradual and measured interest rate hikes being appropriate for now, although it could be adjusted if outlook shifts.
The Malaysian ringgit weakened 0.3%, hitting its lowest since 1998. Malaysia is scheduled to report its September CPI inflation numbers later in the week.
Meanwhile, the Indonesian rupiah also fell 0.3% on Monday.
The Chinese yuan edged 0.1% lower. The week-long Communist Party Congress in China that began on Sunday is expected to grant a third term to President Xi Jinping.
"Of note, the absence of a shift from COVID-zero strategy could also weigh on the yuan and regional currencies," Maybank analysts said in a note.
Additionally, China's third-quarter real GDP data is expected to underline the intensifying challenges at home and abroad for the world's second-largest economy, a Reuters poll showed. The government is due to release the GDP data, along with September activity data on Tuesday.
Among Asian equities, Vietnamese equities led losses, falling 1.8%, followed by the Taiwaese benchmark dipping 1.2%. However, shares in China, Philippine, and India and Malaysia gained. - Reuters
