* Singapore June core inflation rises to 4.4%, beats forecasts * Philippine stocks jump as much as 1.6%, hit one-week high * U.S. FOMC meeting, Q2 prelim GDP in Taiwan, S.Korea awaited By Harish Sridharan July 25 (Reuters) – Asian currencies struggled for momentum on Monday, as caution prevailed ahead of a U.S. Federal Reserve meeting this week, while Singapore stocks pared most of their gains after the city-state reported higher-than-expected inflation for June. South Korea’s won and the Thai baht both dipped 0.1%, while Indonesia’s rupiah edged up 0.1%. Shares in Singapore rose as much as 0.9% to their highest since June 9 before cutting gains on the inflation data and were last up 0.1%. The local dollar was flat. Singapore’s key consumer price gauge rose in June at its fastest pace in more than 13 years, driven by higher inflation across a broad set of categories including services, food, retail and utilities. The core inflation rate — the central bank’s favoured price measure – rose to 4.4% in June on a year-on-year basis, beating a Reuters estimate for a 4.2% increase. “Our base case is for the Monetary Authority of Singapore (MAS) to further tighten FX policy in October with a 50-bp slope increase, with a high risk of another upward re-centring,” Brian Tan, an economist at Barclays, said. Earlier this month, the MAS tightened its monetary policy in an off-cycle move to slow rising inflation. Asian central banks have come under a lot of pressure to normalise their pandemic-era policies, stoked by rising inflation and weakening local currencies. Widening rate differentials have also contributed to further capital outflows, thus exacerbating these concerns. The Fed’s two-day meeting, which concludes on Wednesday, will be critical in determining the policy tightening path for regional central banks. Markets are priced in for a 75-basis-point (bp) rate increase, with about a 9% chance of a 100-bp hike. “So long as the Fed maintains its aggressively hawkish path, financial turbulence in asset markets, especially for central banks that are deemed behind the curve, remains a risks,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore. This week, South Korea and Taiwan will both report their second-quarter preliminary gross domestic product figures. In China, a Politburo meeting is also in focus, where a top decision-making body will gather to discuss economic policies for the rest of the year. On Monday, Philippine stocks dropped as much as 1.6% to hit their lowest in a week, after a conglomerate owned by a close associate of former President Rodrigo Duterte said it received a notice of declaration of default from lenders, sending shares in related companies sharply lower. Meanwhile, the Financial Times reported that China had issued stark private warnings to the Biden administration about a possible trip to Taiwan in August by U.S. House of Representatives Speaker Nancy Pelosi. HIGHLIGHTS ** China Evergrande CEO, CFO step down after probe into property services unit ** China plans to set up real estate fund worth up to $44 billion – REDD ** Indonesia considering scrapping domestic sales rule for palm oil exports ** Thai PM survives 4th no-confidence vote, last big test before polls Asia stock indexes and currencies at 0707 GMT COUNTRY FX RIC FX FX YTD INDEX STOCK STOCKS DAILY % S YTD % % DAILY % Japan -0.23 -15.61 -0.77 -3.79 China -0.05 -5.93 -0.57 -10.68 India +0.02 -6.90 -0.69 -4.32 Indonesia +0.13 -4.97 -0.25 4.38 Malaysia -0.04 -6.47 -0.08 -6.56 Philippines -0.11 -9.22 -0.86 -12.82 S.Korea -0.05 -9.51 0.44 -19.28 Singapore +0.06 -2.72 0.09 1.94 Taiwan +0.01 -7.43 -0.09 -18.02 Thailand +0.00 -9.02 0.19 -6.15 (Reporting by Harish Sridharan in Bengaluru; Editing by Subhranshu Sahu)
