Ringgit leads gains in Asian forex

The Malaysian ringgit led gains among emerging Asian currencies on Monday as tepid US jobs data delayed the expected timing of any Federal Reserve rate hike, while Chinese August exports rose more than forecast. The ringgit hit a 14-month high against the euro as investors sought higher yields, borrowing the cheap European currency. Indonesia's rupiah rose as local stocks hit a record high on expectations that President-elect Joko Widodo will go ahead with a plan to cut fuel subsidies.
The Thai baht advanced on short-covering. US employers hired the fewest number of workers in eight months in August and more Americans gave up the hunt for jobs, providing a cautious Fed with more reasons to wait longer before raising interest rates. Last week, most emerging Asian currencies slid as caution ahead of the US jobs data released on Friday offset hopes of more capital inflows after the European Central Bank's policy easing on Thursday.
Adding to support to regional currencies, China's exports beat market expectations. "Liquidity support by the ECB is likely to be the key driver to Asian resilience, coupled with the overall positive August China trade numbers," said Andy Ji, Asian currency strategist for Commonwealth Bank of Australia in Singapore. US economic recovery is still seen remaining firm despite the weaker employment data and that is positive for Asian economies, Ji added.
The ringgit gained as much as 0.5 percent to 4.1010 per euro, its strongest since July 2013. The strength and solid China's exports data supported the ringgit against the dollar. A Singapore-based trader said "a lot of" real money funds bought Malaysian assets in the past few days and such buying is likely to continue.
The rupiah rose on expectations of economic reforms by the new government including a cut in fuel subsidies. The subsidies cost the government about $20 billion a year, or nearly a fifth of its budget, and they were one of reasons behind Indonesia's budget deficit. The country has also been running a current account deficit. Government bond prices rose with the 10-year debt yield down to 7.937 percent, the lowest since May 20. The baht rose as foreign and local banks covered short positions against the dollar. The Thai currency also found support on capital inflows, which lifted both stock and bond prices. Still, importers bought the dollar below 32.00 baht for payments, limiting its upside, traders said.