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Dollar’s resilience hurts Asia FX, weekly regional gains seen – Economic Times

SINGAPORE: Most emerging Asian currencies eased on Friday, hurt by the dollar’s overnight rebound, but regional units were set to see weekly gains on a dovish stance by the US Federal Reserve, with China’s yuan on the course for its best week in a decade.

Malaysia’s ringgit hit a six-year low after data showing February inflation was the weakest in more than five years.

The Indonesian rupiah fell on month-end dollar demand from local companies such as importers.

South Korea’s won slid on caution over possible intervention by the foreign exchange authorities to stem its strength against the yen.

The Philippine peso hit a two-month low as offshore funds sold the currency in overnight non-deliverable forwards markets.

The dollar slid against a basket of six major currencies, but stayed well above this week’s lows touched as the Fed was seen in no rush to raise interest rates after this week’s policy meeting.

The US central bank is still expected to increase borrowing costs this year.

“USD waxes and wanes but market participants remain split on Fed’s policy path. This means lingering uncertainty and higher USD/Asia,” said Andy Ji, Asian currency strategist for Commonwealth Bank of Australia in Singapore.

Most emerging Asian currencies have fallen so far this year as higher US borrowing costs will likely hurt attractiveness of higher yields in the region.

YUAN’S BEST WEEK IN DECADE Most regional units, however, were to set to post weekly gains as the Fed’s policy comments this week eased expectations of an early rate hike in June.

The yuan led the way with a 1.2 per cent rise against the dollar so far this week, its sharpest rise since its landmark revaluation in 2005, Thomson Reuters data showed. The weekly gain helped the renminbi reverse losses so far this year.

That came as China’s central bank was suspected of intervening to support the currency, while setting a series of stronger midpoints. The authority was seen fighting against the risk off capital flight and speculation for further depreciation.

Short positions in the yuan were reduced in the last two weeks while sentiment towards regional peers deteriorated, a Reuters poll showed on Thursday.

The Taiwan dollar has risen 0.8 per cent so far this week on stock inflows.

The rupiah has appreciated 0.8 per cent with Indonesia’s central bank spotted intervening after the currency suffered a fifth consecutive weekly loss.

India’s rupee and Thailand’s baht have risen 0.7 per cent each. The won has risen 0.6 per cent.

The peso and the ringgit bucked against weekly regional appreciation.

The Philippine currency has lost 1.2 per cent so far this week, which would be its largest weekly loss since March 2014, as offshore funds sold it amid lower bond prices.

The ringgit has fallen 1.0 per cent on concerns over a possible downgrade in credit ratings amid worries that low oil prices may widen Malaysia’s fiscal deficit.

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