Asian currencies and equities were on the backfoot on Monday while bond yields rose on pressures from broad dollar strength, an aggressive U.S. Federal Reserve and ahead of a spate of central bank meetings this week.

Investors will be assessing policy decisions by central banks in Singapore, South Korea, New Zealand, and the euro zone as well as U.S. inflation data, which will provide clues on policy normalisation.

Also on the radar would be any potential policy action by the People's Bank of China as the world's second-largest economy faces a double whammy from renewed COVID-19 outbreaks and an uptick in inflation.

Data released earlier in the day showed China's factory inflation slowed but beat expectations in March.

Most analysts expect China's central bank to lower borrowing costs and cut reserve requirements for banks to pump more cash into the economy.

Analysts at Maybank expect growing fears of a global growth slowdown to continue to weigh on sentiment and currencies in the region. Inflation concerns return to centre-stage as the United States releases its March numbers on Tuesday, likely showing an uptick from last month, while India's inflation data expected later in the week may also hint at rising prices.

In Asia, the Philippine peso and the South Korean won weakened up to 0.7% each, with the peso logging its worst day this month so far, and the won falling to its lowest in nearly a month, pressured by strength in the U.S. dollar.

The Thai baht, Taiwan dollar, Malaysian ringgit and Singapore dollar slipped between 0.2% and 0.4%.

The Taiwan dollar slumped to its lowest since October 2020 and was on track for its sixth consecutive day of declines. 

Bond yields in the region ticked higher, with India's 10-year benchmark yields jumping to 7.179%, its highest since May 2019, while Indonesia's 10-year yields scaled a one-month high of 6.836%.

Meanwhile, China's 10-year yields fell below U.S. Treasury yields for the first time in 12 years on expectations of monetary easing in China, potentially further widening the divergence in policy from the United States.

Equities were largely in the red on pressures from an aggressive Fed, the slowdown in China, as well as domestic headwinds from rising inflation concerns. Benchmarks in Singapore and Taiwan declined over 1% each.

Indonesian shares jumped as much as 2% on the back of resources stocks as a potential European Union embargo on Russian coal exports sparked a rally in Indonesian coal exporters.

Top coal producers Bumi Resources and Adaro Energy were among the top boosts to the benchmark, advancing as much as 1.6% each.

The country's largest tech firm, GoTo , soared as much as 23% in its market debut. Meanwhile, the Monetary Authority of Singapore is widely expected to tighten its monetary policy later in the week on rising inflationary headwinds to economic growth.

"With geo-political cost shocks ... assessed to overshadow potential negative demand shocks, policy calculus is tilted to more front-loaded tightening sooner," Vishnu Varathan, head of economics and strategy at Mizuho Bank, said in a note.

 

(Reporting by Sameer Manekar in Bengaluru; Editing by Sam Holmes)