BENGALURU: Most emerging Asian currencies were bolstered by a weak US dollar on Tuesday, with the South Korean won leading the charge after softer US economic data signalled a potential pause in Federal Reserve rate hikes and spurred a positive trend in equities.
A slip in new US home sales overnight pushed the dollar to a three month-low, cementing bets that the Fed’s aggressive campaign of raising rates likely peaked.
Investors will look to the US Personal Consumption Expenditure (PCE) data out later this week for further cues on the rate trajectory, with a 25% chance of the Fed beginning to cut rates as early as March next year.
At 0655 GMT, the dollar index, which measures its strength against six major peers, was at 103.2, steady at its last close.
“Players are still banking on Friday’s anticipated slower PCE deflator inflation as a convincing sign that the Fed is done tightening,” analysts at DBS wrote in a note.
Back in Asia, the South Korean won led the gains for the day, advancing as much as 1%, with the Taiwan dollar in tow, ending about 0.4% higher.
Thailand’s baht also traded 0.5% higher, hitting its highest level in three months to trade at 34.870 to the dollar and poised for its second straight monthly gain.
The Thai central bank governor, however, flagged that economic growth in the third quarter was disappointing, even as domestic consumption held up well.
The Singapore dollar, Malaysian ringgit and the Indonesian rupiah traded up to 0.4% higher.
Both the Malaysian and the Philippines currencies are set to snap a three-month losing streak in November, while the Indonesian rupiah is likely to log its biggest monthly gain since January.
The MSCI International Emerging Market Currency Index inched about 0.1% higher on the day, not far from the 18-month peak the index touched last week.
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