Most Asian emerging market currencies strengthened against the dollar, which had weakened in the face of a firm euro on Wednesday, with markets awaiting direction from next week's meetings of the US Federal Reserve and the European Central Bank.
"In the absence of Fed speak and tier one economic data, the US dollar is struggling to find a grip...what really matters for the dollar is how the market is perceiving next week's forward guidance from the Fed," Stephen Innes, head of Asia-Pacific trading for Oanda, said in a note.
"The current currency market narrative is all about corrections and rebalancing ahead of the next week's Fed decision which points to a USD correction with the EUR driving the bus."
Market participants said the euro was boosted when Bloomberg, citing sources, reported that the European Central Bank could conclude its policy meeting next week by announcing when its quantitative easing program will end.
Weakness in the dollar, evidenced by a drop of 0.09 percent in the dollar index, lent strength to Asian currencies on Wednesday.
The export-oriented Taiwan dollar firmed 0.22 percent, in line with the move seen in Thailand's baht. The baht has gained about 2.2 percent this year, following a rise of more than 9.5 percent in 2017.
The Singapore dollar rose 0.18 percent on Wednesday, a little less than Indonesia's rupiah, which trimmed its year-to-date losses to a little more than 2 percent. The Chinese yuan firmed 0.1 percent, gaining for a third straight session. The People's Bank of China set the yuan mid-point at 6.4040 to the US dollar, strengthening it for a second consecutive session.
Moving in the other direction, the Philippine peso weakened 0.09 percent after the Philippine Stock Exchange's benchmark equity index dropped as much as 0.4 percent.
Malaysia's ringgit weakened 0.08 percent after Prime Minister Mahathir Mohamad said he had accepted the resignation of central bank governor Muhammad Ibrahim.
Mahathir said he has not decided on who the next governor of Bank Negara Malaysia will be.
About two weeks ago, Malaysia's central bank said it passed details of a deal to buy land from the government to the anti-corruption graft agency, after reports that funds from the deal may have been used to pay liabilities of troubled state fund 1Malaysia Development Berhad (1MDB).
India's rupee firmed 0.12 percent, wiping out much of the previous day's losses. Reserve Bank of India policymakers are due to meet later on Wednesday to set interest rates, with most analysts polled by Reuters expecting the RBI to stand pat.
"Domestic bond markets are likely to trade with caution today, ahead of the RBI monetary policy committee's rate decision," wrote Eugene Leow and Radhika Rao of DBS Bank Ltd. "Market participants are split on the policy direction, with consensus expecting a hold decision, while a minority (including us) call for a small 25 basis point hike," they said.
Comments
Comments are closed.