* Thai baht jumps nearly 2% * Stocks in S.Korea, India rise more than 1% each * Philippine cenbank keeps benchmark rate unchanged (Updated at 0712 GMT) By John Biju Dec 14 (Reuters) – Emerging Asian currencies and stocks joined a rally in global markets on Thursday, after the U.S. Federal Reserve flagged a likely end to its tightening cycle and signalled reduced borrowing costs are coming next year. The South Korean won and the Indonesian rupiah rose more than 1% each, while Thailand’s baht jumped nearly 2%. Stocks in South Korea, Thailand, India and Indonesia gained more than 1% each. The Philippine peso was largely unchanged at 55.67 per dollar after the Bangko Sentral ng Pilipinas (BSP) kept interest rates unchanged for a second straight meeting. Equities in the Philippines rose 2.5% and were on track for their best day since early February. “They are definitely not in any hurry to be looking at easing interest rates,” said Khoon Goh, head of Asia research at ANZ. “Even if the Fed were to cut interest rates next year, I doubt very much the BSP will immediately follow suit, given that inflation in the Philippines is still somewhat elevated.” “We are anticipating the peso to underperform the rest of the regional currencies next year.” Meanwhile, Fed Chair Jerome Powell said the historic monetary tightening is likely over as inflation falls faster than expected, with a discussion of cuts in borrowing costs coming “into view.” Markets are now pricing in around a 75% chance of a rate cut in March, according to CME FedWatch tool, compared with 54% a week earlier. Amid expectations of a fall in U.S. yields, the differential between U.S. and Asia rates will narrow, benefiting higher yielding Asian currencies, according to Ray Sharma-Ong, investment director of multi-asset at fund manager abrdn. “We expect currencies such as KRW, TWD and THB” to perform well, he said, referring to the South Korean won, Taiwan dollar and the Thai baht. “We also expect Asia equity markets to improve as U.S. growth moderates while Asia growth remains resilient,” he said. The Taiwan dollar advanced 0.7% while equities climbed 1.1%. Investors in emerging Asian assets also monitored developments in Argentina where the government allowed its peso to plunge over 50%, cut energy subsidies and cancelled public works tenders as part of an economic shock therapy aimed at fixing the South American country’s worst crisis in decades. HIGHLIGHTS: ** India’s 10-year benchmark yields fall 4.8 basis points to 7.211% ** Japan’s central bank to sit tight on policy, may drop hints on pivot ** World Bank cuts Thai growth forecast to 2.5% this year, 3.2% next year Asia stock indexes and currencies at 0712 GMT COUNTRY FX RIC FX FX INDE STOCK STOCK DAILY YTD % X S S YTD % DAILY % % Japan +0.78 -7.53 <.N2 -0.73 25.26 25> China EC> India +0.08 -0.74 <.NS 1.14 16.90 EI> Indones +1.07 +0.48 <.JK 1.25 4.58 ia SE> Malaysi +0.79 -5.72 <.KL 0.44 -2.74 a SE> Philipp +0.72 +0.00 <.PS 2.47 -2.37 ines I> S.Korea +1.67 -2.66 <.KS 1.34 13.76 11> Singapo +0.26 +0.77 <.ST 0.72 -3.84 re I> Taiwan +0.67 -1.94 <.TW 1.05 24.87 II> Thailan +1.88 -1.35 <.SE 1.27 -17.5 d TI> 9 (Reporting by John Biju in Bengaluru; Editing by Shri Navaratnam and Subhranshu Sahu)
