Most emerging Asian currencies rose on Friday and posted weekly gains as a spate of disappointing US data raised hopes that the Federal Reserve may further delay an expected interest rate hike. The Indian rupee, however, hit a 3-1/2 month low on capital outflows amid uncertainty over foreign portfolio investment tax.
Taiwan's dollar hit a near five-month high on stock inflows and demand from exporters. The South Korean won advanced to its strongest in almost three months as foreign investors kept buying Seoul shares, while the Singapore dollar hit a near three-month high on better-than-expected industrial output data. Malaysia's ringgit touched a near two-month high as a rebound in oil prices eased concerns over lower crude's impact on current and fiscal accounts of the net oil exporter.
The US dollar broadly fell against a six major currencies overnight as weak new home sales in March and factory activity this month could increase doubts over a strong rebound in the world's top economy after stumbling at the start of the year. The soft data came as the Fed starts a two-day monetary policy meeting on Tuesday. "Should the US data stay weak and the Fed sound more dovish, then further USD weakness will ensue, leading to more Asian currency strength," said Khoon Goh, senior FX strategist for ANZ in Singapore.
Low US interest rates usually help investors seek higher yields in emerging Asian countries. Most emerging Asian currencies were poised for weekly gains, gaining further support after China's central bank on April 19 cut the amount of cash that banks must hold as reserves in its latest bid to support the cooling economy. The ringgit led regional appreciation with a 0.9 percent rise against the dollar so far this week, according to Thomson Reuters data.
Malaysia's government bond prices rose, while investors cut bearish bets on the second-worst performing Asian currency so far this year. Taiwan's dollar advanced 0.8 percent this week as foreign investors were net buyers in the local stock market for the previous three consecutive sessions. Continuous stock inflows also helped the won have rise 0.5 percent so far this week.
The rupee bucked against the regional appreciation with a 1.7 percent loss so far this week. That would be the largest weekly depreciation since early August 2014, Thomson Reuters data showed. The Indian currency came under pressure from concerns over retrospective taxation on foreign portfolio investors. Japan's Daiichi Sankyo Company Ltd is selling shares worth up to $3.6 billion in Indian drugmaker Sun Pharmaceutical Industries Ltd and concerns about that money flowing out of the country also hurt the rupee. Indonesia's rupiah fell 0.7 percent so far this week on dollar demand from importers.
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