SINGAPORE: Most emerging Asian currencies rose on Wednesday as Federal Reserve Chair Janet Yellen's cautious stance on monetary policy tightening fanned expectations of slower US interest rate hikes.
Yellen, in a speech on Tuesday, stressed the need to be cautious in raising rates and highlighted external risks such as low oil prices and slow growth abroad.
Her comments were in contrast to those of Fed policymakers, who recently had fanned expectations for more tightening.
The Chinese yuan gained after the central bank set a stronger daily guidance rate for the currency.
Malaysia's ringgit rallied to its strongest level in more than seven months on stop-loss dollar selling.
The South Korean won firmed to its strongest in over four months, helped by exporters' buying for month-end settlements.
The Taiwan dollar also touched a one-week high on similar local corporate demand.
Sean Yokota, head of Asia strategy at Scandinavian bank SEB in Singapore, expected the US dollar to weaken further, saying the Fed is becoming more dovish along with the Bank of Japan and the European Central Bank. The greenback may slide until the end of April when the BOJ is seen easing policy more, he added.
Still, Yokota doubted if emerging Asian currencies could find sustainable support from the easing in developed economies.
"I don't think EM FX or risk rally can continue. Central banks can provide short-term relief but they are temporary. It's hard to see evidence of renewed growth coming out of the giants like the US and China."
RINGGIT
The ringgit jumped as much as 1.3 percent to 3.9500 per dollar, its strongest since Aug. 11, as demand related to daily fixing added to support.
"The market has been wrong footed," said a senior Malaysian bank trader in Kuala Lumpur, adding that investors rushed to dump the dollar against emerging Asian currencies including the ringgit.
"I expect the USD to fall another 2 percent against Asian currencies over the next 4-6 weeks. If US NFP data is weak, the 2 percent will come sooner," the trader said, referring to a US non-farm payrolls report due on Friday.
WON
The won rose 1.1 percent to 1,151.2 per dollar, its strongest since Nov. 27, on stop-loss dollar selling.
The South Korean currency pared earlier gains as some traders suspected intervention at around 1,150 to slow the won's advance. The won has chart resistance at the level, the 76.4 percent Fibonacci retracement of its depreciation from October to February, analysts said.
The won has gained 7.2 percent against the dollar so far this month, which would be the largest monthly appreciation since April 2009, according to Thomson Reuters data.
TAIWAN DOLLAR
The Taiwan dollar gained nearly 1 percent to 32.382 per the US dollar, its strongest since March 23.
The island's currency strengthened past 32.400 level on demand from foreign financial institutions. Local shares jumped 1.4 percent.
The central bank has not been spotted stemming the Taiwan dollar's advance yet, traders said, although caution over such intervention grew.
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