(Oct 22): The Philippine peso gained after the central bank delivered an outsized interest rate hike on Thursday, but later gave up those gains and drifted back towards a record low as sticky inflation and slowing growth remained key concerns.

The Bangko Sentral ng Pilipinas raised its key interest rate by 50 basis points to 5.50%, delivering a larger-than-expected increase and marking its fourth consecutive rate hike.

"The decision today was proactive and targeted at mitigating second-round price pressures, considering still elevated global oil prices and the impact of the El Niño phenomenon on food prices," said Lavanya Venkateswaran, senior Asean economist at OCBC Bank.

"Should core inflation remain elevated in the coming months, the door for further hikes remains open."

The peso rose as far as 63.309 per dollar immediately after the rate hike before reversing course later in the day. It was last quoted at 63.40 per dollar, not far from its record low of 63.438 hit on Wednesday.

The currency has plunged nearly 10% since the beginning of the Middle East war, which sparked a rally in oil prices.

The oil-dependent economy is caught between oil-fuelled inflation and slowing growth, with a construction slump and weaker domestic demand hurting activity.

Shares in Manila fell further after the rate decision and were last down 1.1%.

Among other equity markets, Indonesia climbed 0.9% and were on track for a third consecutive session of gains.

"It looks more like a buy-the-dip opportunity than a meaningful shift in the market's fundamentals," said Gerald Gan, chief investment officer at Reed Capital Partners, citing lingering concerns around financial regulations and the transboundary haze linked to fires in Indonesia.

"Until there is greater clarity on these issues, I would view the rebound as tactical rather than the start of a sustained re-rating."

Sovereign wealth fund Danantara Indonesia has been buying shares in companies it considers attractive, its chief investment officer said, after a record two-day rout earlier this week.

Bank Indonesia kept its benchmark policy rate unchanged on Wednesday, though it hiked its overnight deposit rate and cut reserve requirements to curb market volatility and support job creation.

The rupiah has depreciated nearly 0.5% over the past two days, last seen at 18,040 per dollar. It has fallen about 8% this year, heading for its worst performance since 2022.

MSCI's emerging Asia equities index fell 2.5% to its lowest in nearly three months, weighed down by a 3.5% drop in South Korea's Kospi and a 1.8% decline in Taiwan's benchmark index.

Profit-taking in chip stocks pressured South Korean equities. The Bank of Korea left its benchmark rate unchanged as expected while maintaining a hawkish stance.

The South Korean won has gained nearly 15% in the second half of the year so far. 

Uploaded by Magessan Varatharaja