Asia FX: Mixed central bank paths shape THB, KRW, PHP – BBH
Brown Brothers Harriman’s (BBH) Elias Haddad expects the Bank of Thailand (BoT) to hold rates at 1.00%, leaving negative real yields that keep Thai Baht (THB) lagging. The Bank of Korea (BoK) is seen hiking again to 3.00%, supporting South Korean Won (KRW) as growth and inflation exceed targets. The Bangko Sentral ng Pilipinas (BSP) is forecast to deliver a third 25 bps hike to 5.00% to curb Philippine Peso (PHP) weakness after USD/PHP hit record highs, partly on stronger Oil prices.
Divergent policy outlooks across Asia
"Bank of Thailand (BoT) is widely expected to keep the policy rate at 1.00% for a third straight meeting (Wednesday). Negative real rates should keep THB an Asian FX laggard."
"Bank of Korea (BoK) is expected to deliver a back-to-back 25bps hike to 3.00% (Thursday). A minority of analysts polled by Bloomberg (5 of 17) have no change penciled in. We expect BOK to raise rates which can offer KRW additional support."
"After voting unanimously to lift rates at its last July meeting, BoK stressed “that it will be necessary to continue a policy stance consistent with further rate hikes.” Indeed, real GDP growth is on track to exceed the bank’s 2.6% forecast for 2026, and inflation remains above the 2% target level."
"Philippine central bank (BSP) is expected to deliver a third consecutive 25bps hike to 5.00% (Thursday). A minority of analysts polled by Bloomberg (4 of 22) have no change penciled in."
"We expect BSP to raise rates to curtail PHP weakness. USD/PHP rallied to a record high near 62.00 last week, underpinned in part by firmer crude oil prices."
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