Asian currencies broadly up

Asian currencies were broadly firmer on Friday, as the dollar slumped in the wake of weak factory inflation data and hawkish comments from the European Central Bank. The euro firmed against the dollar on Thursday after minutes of the ECB's December meeting suggested that policymakers could soon start preparing markets for the end of the central bank's massive stimulus scheme.
Meanwhile, US producer prices in December fell for the first time in nearly 1-1/2 years amid declining costs for services, which could temper expectations that inflation will accelerate in 2018. That further added to weakness in the dollar.
"The US dollar was hammered on the back of mildly hawkish European Central Bank minutes and a big miss on US December PPI which fell for the first time in 16 months," said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader, in a note. The Korean won led gains among regional currencies, firming 0.8 percent. However, the won was on track for its first weekly loss in five weeks.
The Malaysian ringgit strengthened 0.4 percent and was on track to end the week 0.6 percent higher. The Indian rupee firmed 0.2 percent, ahead of the release of inflation data later in the day.
India's retail inflation likely rose to a 17-month high in December, boosted by increased prices for some foods and the impact of higher pay for government employees, a Reuters poll showed. A pick-up in inflation could push the central bank to tighten monetary policy, as India's central bank restated a neutral stance in December but said that "all possibilities are on the table" depending on how price pressures and growth pan out.
The Thai baht strengthened 0.3 percent, and was on track to end the week 1 percent higher, the best among regional currencies. Thailand expects to receive investment proposals of 720 billion baht ($22.56 billion) this year, up 12 percent from 2017, the investment promotion agency said on Friday. The nation's solid fundamentals and continued bond portfolio inflows continue to support the rise of the baht, said Qi Gao, FX Strategist (EM Asia) at Scotiabank. Investors raised bullish bets on most Asian currencies over the last three weeks, as the dollar was hit by uncertainty over the pace of US rate increases, the euro rally and possible tapering of Japanese stimulus. Among regional currencies, long positions on the Indian rupee reached its highest since August 2017, while the yuan saw bullish positions being raised to their most since September 9.