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EMERGING MARKETS-Asian FX, stocks climb as U.S. inflation print lifts appetite

* China growth seen rebounding to 4.9% in 2023 – poll * Indonesia Dec trade surplus narrows more than expected * U.S. dollar fell to 7-month low vs major peers By Jaskiran Singh Jan 16 (Reuters) – Most emerging Asian currencies and equities climbed on Monday as investors have seized on hints that easing U.S. inflation may give the Federal Reserve a leeway to scale back the size of its future interest rate hikes. Leading gains in the region, the Indonesian rupiah marked its highest level since Sept. 20, 2022 after gaining 1% in early trade. Thailand’s baht tracked gains for a second straight day and hit its highest level since March 2022 after appreciating up to 0.9%. Data from last week showed U.S. consumer prices fell for the first time in over 2-1/2 years in December, boosting the case for the central bank to ease off from its hawkish monetary policy. “It looks like we continue to see inflation expectations being priced out from the market post the U.S. CPI number last week that showed softening, hence, a risk-on sentiment supports EM currencies now,” said Junvum Kim, sales trader at Saxo Markets. Indonesia, which witnessed an export boom last year due to high commodity prices, saw its trade surplus narrow more than expected in December as export growth weakened while imports slumped, according to data from the statistics bureau. Investor focus is also on a monetary policy meeting due this week by the central bank of Indonesia, Southeast Asia’s largest economy. Elsewhere in Asia, the Malaysian ringgit firmed 0.6%, the Philippine peso gained 0.8% and Singapore’s dollar added 0.1%. The Chinese yuan largely remained listless, while Shanghai stocks gained after health officials said COVID-19 infections in the region likely peaked. Separately, a Reuters poll showed China’s gross domestic product in the fourth quarter of 2022 likely grew only 1.8% from a year earlier as pandemic controls intensified, slowing from the third-quarter’s 3.9% annual pace. Most stocks across the region continued to mirror the upbeat global sentiment, with MSCI’s broadest index of Asia-Pacific shares outside Japan gaining 0.9%, with hopes for a speedy Chinese reopening giving it a 4.2% gain last week. “Given the upcoming Chinese New Year holiday next week, the current momentum on broad-based U.S. dollar weakness shouldn’t change much as China reopening has been one of the main drivers behind the recent strength particularly in commodity currencies,” Kim said. Stocks in Philippines jumped the most, with a 2% gain, while shares in South Korea, Taiwan and Thailand rose between 0.4% and 0.7%. Stocks in Malaysia and Singapore edged lower. HIGHLIGHTS: ** Thousands of Indonesian workers protest against president’s job decree ** Japan’s Nikkei dives 1% as BOJ capitulation bets push up yen ** Indonesia palm oil export curbs, biodiesel plans to hit world vegoil supplies Asia stock indexes and currencies at 0840 GMT COUNTRY FX RIC FX FX INDEX STOCKS STOCKS DAILY % YTD % DAILY YTD % % Japan +0.07 +2.60 -1.14 -1.20 China India -0.06 +1.66 -0.11 -0.93 Indonesi +0.79 +3.61 0.16 -2.89 a Malaysia +0.56 +2.09 -0.34 -0.37 Philippi +0.77 +2.18 2.18 8.17 nes S.Korea Singapor +0.13 +1.70 -0.37 0.93 e Taiwan +0.44 +1.50 0.69 5.58 Thailand +0.50 +5.30 0.43 1.21 (Reporting by Jaskiran Singh in Bengaluru; Editing by Sherry Jacob-Phillips)

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