SINGAPORE, Nov 7: Most emerging Asian currencies crawled higher on Thursday, helped by the euro’s rebound, but many investors kept to the sidelines ahead of key U.S. Economic data for clues on when the Federal Reserve will scale back its stimulus.
The Taiwan dollar gained on financial inflows. The Indonesian rupiah advanced on exporters’ buying and after officials proposed opening up more business to foreign investors.
The euro gained after strong German economic data dented expectations of an interest rate cut by the European Central Bank later in the day.
The single currency had been weaker due to data last week showing a slowdown in inflation. Its recent depreciation powered the dollar index and dragged emerging Asian currencies lower.
Regional currencies were already under pressure from worries that the Fed may start cutting its bond-buying programme.
‘Unless Draghi makes dovish comments, Asian currencies may rise a bit more, tracking the euro’s rebound. It looks a bit difficult for the ECB to cut rates now, given strong data in North Europe,’ said Jeong My-young, Samsung Futures research head in Seoul, referring to ECB President Mario Draghi.
‘Still, Asian currencies are unlikely to move much on increasing fears on the Fed,’ Jeong added.
Investors are keeping an eye on U.S. Data later this week including the first reading of third-quarter growth and October non-farm payrolls.
Two top Fed staff economists called for the central bank to drive down unemployment by promising to hold interest rates lower for longer.
TAIWAN DOLLAR
The Taiwan dollar advanced on some foreign financial inflows.
Domestic importers bought U.S. Dollars for payments on dips, limiting the upside of the island’s currency, traders said.
The central bank was spotted not only buying the greenback but also selling it, locking the Taiwan dollar in a tight range, traders added.
RUPIAH
The rupiah gained as local banks bought it on behalf of clients including exporters especially around 11,400 per dollar, traders said.
The forward onshore market, or Jakarta Interbank Spot Dollar Rate (JISDOR), was fixed at 11,389 per dollar, compared with the previous 11,414.
Jakarta stocks rose 0.8 percent, outperforming most regional peers, while yields of short-term bills fell. Three-month yields fell to 6.588 percent from Wednesday’s 6.600 percent.
The Indonesian currency pared much of its initial gains on dollar demand from domestic banks, while foreign banks showed little interest in the unit, traders said.
‘I don’t think so at the moment,’ said a Jakarta-based trader when asked if the rupiah would strengthen further.
The traders said ‘a lot of buyers’ were waiting to purchase the greenback around its session low of 11,355.
PHILIPPINE PESO
The Philippine peso edged up as local interbank speculators added bullish bets amid broad weakness in the dollar.
The 10-year bond yield fell to 3.519 percent, its lowest since May 28. The yield was at 3.554 percent on Wednesday.
Some traders still preferred to sell the peso on rallies on caution over possible intervention by the central bank to stem volatilities.
‘Holding a small long USD position here would be the more defensive play as the downside has proven to be well supported,’ said a senior Philippine bank trader in Manila.
The traders said most of the recent bond inflows were also settled.
(agencies)
Follow our WhatsApp channel