Emerging Asian currencies rose on Friday as risk assets rallied with the European Central Bank's signal on more stimulus, while most regional units were set to report weekly losses on worries about a slowing Chinese economy. The Malaysian ringgit and the Indonesian rupiah earlier jumped around 2 percent as their governments' bond prices rose.
South Korea's won advanced more than 1 percent on demand from offshore funds. The economy grew in the third quarter at its fastest pace in more than five years on a strong recovery in domestic demand. ECB President Mario Draghi said on Thursday that the central bank was studying new stimulus measures that could be unveiled as soon as December and was prepared to cut its deposit rate deeper into negative territory. The comments also lifted global stocks and other risky assets.
"There are expectations that further QE from the ECB will see the increased liquidity result in more inflows into Asia," said Khoon Goh, senior FX strategist for ANZ in Singapore, referring to quantitative easing. The Indian rupee is seen benefiting more than regional currencies due to higher yields and relatively better fundamentals, while the won would be another beneficiary on possible inflows to stocks, he said.
Still, most emerging Asian currencies were on the course for weekly losses as investors resumed adding bearish bets on persistent worries about China's slowing economy. Growth in the world's second-largest economy dipped below 7 percent in the third quarter for the first time since the global financial crisis.
China's 6.9 percent expansion was slightly better than expected, but sharp slides in mainland Chinese stocks on Wednesday reminded investors of its weakness. The ringgit has lost 1.2 percent against the dollar so far this week, leading slides among regional currencies, Thomson Reuters data showed. The Malaysian currency came under pressure from low oil prices and growing caution ahead of the government's 2016 budget plan due later on Friday.
Dogged by a graft scandal and falling oil and gas revenues, Prime Minister Najib Razak will present the budget that will look to boost economic growth and appease voters unhappy with his leadership and rising costs. "The market focus will be on whether the Malaysian government will opt to put forward a credible budget or will offer expense handout concessions to shore up Prime Minister Najib popularity and support," said Stephen Innes, senior trader for FX broker OANDA in Singapore.
Thailand's baht has slid 0.9 percent throughout this week, while the Philippine peso has fallen 0.8 percent. The rupee, the Chinese yuan and the Singapore dollar have edged down so far this week. Taiwan's dollar bucked against the regional weakness with a 0.4 percent gain throughout this week as foreigners continued to buy local stocks. The island's export orders fell far less than expected in September with orders from Europe turning to growth. The won has risen 0.3 percent.
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