Thai baht gains on quarantine-free travel hopes; Asia FX gains - REUTERS
BENGALURU, Jan 18 (Reuters) - Thailand's baht rose on Tuesday on hopes that the tourism-reliant country waives quarantine for vaccinated visitors again, while its emerging market peers gained on a U.S. dollar unperturbed by a rise in Treasury yields.
Treasuries rose along the curve during Asia hours, with two-year yields , which track short-term rate expectations, crossing 1% for the first time since Feb. 2020, as investors brace for a more hawkish Federal Reserve.
Investors are eyeing the Fed's Jan. 25-26 meeting following a chorus of hawkish statements by officials in recent weeks. While markets do not expect an interest rate hike next week, bets are growing that the central bank will start tightening in March.
In Thailand, the government is considering bringing back a quarantine waiver for vaccinated visitors, its health minister said. If approved, the waiver could begin by Feb. 1, he added. read more
"Expect the baht to benefit from this feel-good development," analysts at OCBC said.
The baht gained as much as 0.7% early on to its highest level since Nov. 22 last year, before paring much of those gains to trade 0.3% higher. Stocks (.SETI) also briefly scaled a 2019-high.
"This push may well be speculative, as there are still no signs that tourist inflows will return in sufficiently large numbers to justify sustained baht appreciation," OCBC added.
Stocks in Shanghai (.SSEC) climbed 1%, a day after better-than-expected economic growth in the fourth quarter was partly overshadowed by weak retail sales. The central bank had also cut a key lending rate and analysts expect more to come. read more
China's top economic planner said on Tuesday that policymakers will quickly roll out more measures to boost demand.
"The biggest downside risk to the market's view on Fed hikes lies with China," Eugene Leow, a senior rates strategist at DBS said, referring to headwinds facing the world's second-largest economy.
"While GDP growth did surprise on the upside and the PBoC have taken steps to ease liquidity and cut policy rates, there is still significant stress in property credits."
In South Korea, the won advanced 0.4% while stocks (.KS11) dropped 0.3%. Retail subscriptions open for LG Energy Solution's $10.8 billion initial public offering and close on Wednesday.
Central banks in Malaysia and Indonesia end will conclude two-day policy meetings on Thursday, though no change in policy is expected.
Markets in Malaysia were closed for a holiday.