Emerging Asian currencies rose on Wednesday as risk sentiment improved in the light of a probable increase in euro zone stimulus and a solid services survey from China that assuaged fears of a deepening economic slowdown. The Indonesian rupiah hit a near two-week high as local stocks continued to rally ahead of third-quarter growth data that is expected to be slightly better than the previous three months.
The Taiwan dollar also reached its strongest level in about two weeks on firm domestic shares. South Korea's won gained versus the dollar on exporter settlement demand. The won touched a near three-month peak. The Malaysian ringgit advanced in thin trade as overnight rallies in crude prices alleviated concerns over the country's falling gas and oil revenues. European Central Bank President Mario Draghi reiterated that further easing was on the table for December.
"The prospect of more central bank (ECB) stimulus has investors chasing riskier assets and yield," says Stephen Innes, Senior Trader at OANDA in Singapore. Activity in China's services sector expanded at its fastest pace in three months in October on stronger new business, a private survey showed. Still, investors remained wary ahead of October US jobs data due on Friday, which will inform the Federal Reserve's inclination to raise interest rates in December.
Economists expect US employers to have added 180,000 jobs last month, according to a Reuters poll. The rupiah rose nearly 1 percent to 13,420 per dollar, its strongest since October 23. Jakarta shares advanced 1.5 percent, outperforming most Southeast Asia peers. Indonesia will announce economic growth data on Thursday. Growth in Southeast Asia's largest economy was expected to rebound in the third quarter to 4.79 percent on an annual basis from a 4.67 percent in the second quarter, a Reuters poll showed.
Most of the rupiah's non-deliverable forwards (NDFs) gained on demand from leveraged funds. Most government bond prices rose. The strength in NDFs led local investors to unwind bearish bets in spot rupiah. Still, the rupiah has chart resistance at 13,392, its a 200-day moving average, analysts said. The currency has been closing daily sessions weaker than the average since September 2014.
The Taiwan dollar advanced 0.9 percent to 32.320 per the US dollar, its strongest since October 23. Stocks jumped 1.6 percent. Foreign investors were net buyers in the market during the previous two consecutive days, purchasing a combined net T$14.5 billion ($448.4 million), the Taiwan Stock Exchange data showed. The won gained as much as 0.4 percent to 9.2900 per the yen, its strongest since August 11.
Caution grew over possible intervention by South Korea's foreign exchange authorities to stem the won's strength versus the Japanese currency. The two countries compete for sales of various products such as cars. "The yen/won found support around 9.3 as that was an intervention level before," said a foreign bank trader in Seoul.
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