Asian currencies were broadly firm against the dollar on Tuesday, boosted by gains in regional equities and optimism about economic growth in the region.
The Indonesian rupiah hit a one-month peak at about 9,910 per dollar as investors cheered changes to the cabinet's top economic positions, but it dropped back slightly after Bank Indonesia delivered a smaller-than-expected interest rate rise.
The central bank raised the BI rate, its target rate for one-month certificates, by 50 basis points to 12.75 percent to contain inflation, which is at a six-year high.
This disappointed some in the currency market who had been looking for a rise of between 75 and 100 basis points.
Still, analysts said sentiment was likely to stay upbeat after President Susilo Bambang Yudhoyono named respected former Finance Minister Boediono as his chief economics minister, replacing Aburizal Bakrie.
Planning Minister Sri Mulyani Indrawati moves across to take on the finance portfolio from Jusuf Anwar.
"Indonesia has been raising interest rates and hiring and firing the right people, so it is on the right track," said J.P. Morgan currency strategist Claudio Piron. "The rupiah is likely to close up on the day but it will give up some of its gains."
The South Korean won gained more than a third of a percent to 1,033.0, boosted by foreign buying in the local equity market, whose index hit an all-time high.
The Taiwan dollar added a quarter of a percent to a three-week high of 33.405 per dolla, helped by expectations that the victory of Taiwan's opposition party in local government elections at the weekend would spur more foreign fund inflows.
Its success has been welcomed by financial markets because the opposition is viewed as having a more conciliatory approach to China, the island's top trading partner.
Analysts said favourable economic data meant Asia's currencies were holding up well against the dollar.
"We are getting stronger-than-expected numbers for the third quarter and the export numbers are also showing that growth will be a bit better going into the first quarter despite high oil prices," said Jimmy Koh, head of economics and treasury at United Overseas Bank.
Thailand's economy expanded 2.2 percent in the third quarter from the previous three months, beating market forecasts, data on Tuesday showed.
Optimism about the economic outlook and rising short-term interest rates in Singapore helped push the Sing dollar to a two-month peak of about 1.6830 per dollar.
Three-month rates have risen to their highest level since early 2000. Traders said the upward pressure on rates was aimed at raising the appeal of local assets as interest rates around the region rise.
Dealers in the Philippines said central bank intervention to cap the peso's strength had undermined the currency in early trade.
The peso underperformed other Asian currencies for much of the day before strengthening slightly to about 53.87 per dollar in late trade.
Comments
Comments are closed.