Thai baht, Philippine stocks slump as traders assess Trump win implications
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Thai baht hits more than 2-month low
Philippine stocks fall 2.8%
Singapore stocks rally 2.3%
By Himanshi Akhand
Nov 7 (Reuters) -The Thai baht fell for a second day and other Asian currencies traded with a weak bias on Thursday, as investors priced in heightened tensions around security and trade in a second Donald Trump presidency.
Stock markets around the region softened too, with the Philippine benchmark index .PSI down 2.8% and counting losses of 4% over two sessions.
Trump's victory in the U.S. presidential election have fuelled fears his proposed tariffs and immigration policies would stoke inflation, which would slow policy easing by the Federal Reserve and lift the dollar.
The Fed is expected to reduce rates by 25 basis points later in the day, and the market focus will be on any clues that the U.S. central bank could skip a cut in December.
Even before the election, concerns over Trump's policies had weighed on emerging economies. Trump has promised to slap new and potentially hefty tariffs on a wide swath of goods from countries including China and Mexico - the top U.S. trading partners.
China's yuan CNY=CFXS was trading at a three-month low, while the Thai baht THB=TH fell to its lowest level in more than two months.
Mexico's peso MXN= was last down 0.3%, after having slumped to its lowest in more than two years on Wednesday.
The South Korean won KRW=KFTC fell past 1,400 to its lowest since late 2022.
"The won's weakness is being aggravated by the fact that the structure of South Korea's exports is formed in a way sensitive to China, with currency weakness steeper across countries of high trade dependency," said Baik Seok-hyun, economist at Shinhan Bank.
Trump has pledged to impose tariffs of as much as 60% against China, and his vice presidential candidate JD Vance has proposed a 10% tax on remittances, important for many Latin American economies.
Tariff hikes will also hurt chipmakers in Taiwan, South Korea and other countries that produce for Chinese tech firms.
"Questions remain around how quickly tariffs can be implemented, whether they would just be 50% or 60% tariffs on China alone or if more economies other than China would be exposed to tariff hikes," Morgan Stanley analysts said in a note.
"Asia excluding China has become more dependent on the U.S. as a source of end-demand. A universal tariff would also limit the incremental benefit Asia ex-China receives from supply-chain diversification efforts."
A Treasuries sell-off and the dollar's rise will also suck money out of emerging markets. Treasury yields have climbed steadily since October. US/
Analysts believe that the response from regional central banks would depend on the magnitude of growth downside and the extent of currency depreciation, which could limit their ability to cut interest rates immediately.
Malaysia's central bank kept its key policy rate unchanged on Wednesday, but warned about potential currency volatility.
The ringgit MYR= extended losses to hit its lowest level since mid-August and was last down 0.2%.
Regional stock markets were mixed. Jakarta equities .JKSE fell up to 1% to hit their lowest in nearly three months.
Meanwhile, stocks in Singapore .STI rallied as much as 2.3% to hit their highest level in 17 years.
Shares of DBS Group DBSM.SI rose as much as 7% to become the top gainer in the benchmark index, after the city-state's biggest bank posted a record quarterly net profit.
China stocks .SSEC also edged higher, buoyed by investor optimism over potential stimulus measures. China's week-long National People's Congress Standing Committee meeting concludes on Friday.
HIGHLIGHTS:
** Philippines GDP yr/yr growth slows to 5.2% in Q3
** What's at stake for Asian companies in a Trump presidency
** China's exports soar past forecast as factories front-run Trump tariff threat
Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
Asian stock markets https://tmsnrt.rs/2zpUAr4
Reporting by Himanshi Akhand in Bengaluru; Additional reporting by Jihoon Lee; Editing by Subhranshu Sahu
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