SINGAPORE: Most emerging Asian currencies strengthened on Thursday as the dollar weakened following seemingly dovish minutes from the Federal Reserve’s last policy meeting and possible new US tariffs.
While the minutes showed most policymakers thought it likely another interest rate increase would be warranted, the minutes also assuaged fears the Fed would speed up the tempo at which it raises rates.
“The FOMC minutes left little clue with regards to prospects for a fourth hike for 2018, although expectations for the next hike were cemented further,” OCBC Bank said in a note.
Caution was magnified by new setbacks in US-China trade talks and as U.S President Donald Trump raised the prospect of new tariffs on imported cars.
Indonesia’s rupiah, which has been facing intense volatility of late, firmed 0.3 percent to 14,160.
Statements from Perry Warjiyo, Bank Indonesia’s newly appointed governor, affirmed its commitment to stabilising the currency, noting that BI had bought more than 50 trillion rupiah of bonds from foreign holders so far this year.
Singapore’s dollar was a shade firmer at 1.342 after news the city-state’s economy grew slightly faster in the first quarter than initially estimated.
That news prompted the government to revise its full-year growth outlook upward to between 2.5 percent and 3.5 percent.
India’s rupee consolidated at 68.325 after falling on Wednesday to its lowest in more than a year.
Surging oil prices have weighed on India, the world’s third largest importer of the commodity, raising fears that soaring costs could drive up inflation and widen the trade deficit.
SOUTH KOREAN WON
The South Korean won gained 0.2 percent on the dollar after the central bank kept rates unchanged as expected for a sixth straight month, taking into account inflation running below target and fears of spillover effects from Sino-US trade tensions.
Bank of Korea Governor Lee Ju-yeol said the vote to hold rates was unanimous, upsetting predictions that dissenting votes may have signalled a rate hike later in the year. MALAYSIAN RINGGIT
The Malaysian ringgit pared some losses afer slipping to its lowest in more than four months.
“The ringgit remains mired in political risk as the market tries to understand details about the new government’s plan to deal with the fiscal deficit after repealing GST,” said Stephen Innes, head of trading for Asia-Pacific at Oanda.
Foreign investors have trimmed their exposure to local bonds with the possible implications of the new government’s fiscal and economic polices weighing on sentiment.
Equity markets have seen sustained net foreign outflows so far this week, with the Malaysia index slipping to its lowest level in five months earlier in the session.
“All roads are pointing to a test of 4 ringgit to the dollar as the Kuala Lumpur Composite Index continues to break down on the lack of foreign demand,” added Oanda’s Innes.