Asian currencies stay firm

The Singa-pore dollar hit an eight-month high on Friday and most Asian currencies were set to show weekly gains against the US dollar, after the Federal Reserve turned less hawkish in its expectations for US interest rate rises over the next nine months. The Singapore dollar reached a high of 1.3480 to the US dollar, the strongest level since last July. It later came off that high and was last down 0.4 percent on the day. A number of other Asian currencies touched multi-month highs against the dollar, including the Malaysian ringgit, which reached its strongest level since last August according to Reuters data.
Most Asian currencies were on track for weekly gains, as the dollar fell broadly after the US Federal Reserve kept interest rates unchanged on Wednesday and lowered its expectations for the number of interest rate hikes by the year end from four earlier to just two. Emerging Asian currencies could see more gains against the dollar over the next few weeks, said Sean Yokota, head of Asia strategy at Scandinavian bank SEB. Whether Asian currencies can see a more sustained rise, will hinge on whether data shows any improvement in China's struggling economy, Yokota added. "If that doesn't stabilise or start to show some improvement, then I think this dollar/Asia trade is finished," he said. "I don't think the housing, or the domestic demand story is coming back just yet," Yokota said about the Chinese economy, adding that China's third-tier housing market still has excess inventory.
INDONESIAN RUPIAH Local importers' dollar demand helped weigh on the rupiah, a trader said. On Thursday, Indonesia's central bank made its third rate cut this year, expanding its bid to help raise the country's sluggish growth pace. While signalling that Thursday's cut isn't the end of the easing cycle, Bank Indonesia (BI) said it will be cautious on its next move and that its current focus is to transmit its policy to the markets.
POSITIONING SURVEY Bullish bets on the Malaysian ringgit hit their highest level since August 2014, and sentiment toward Asian currencies was generally better than two weeks ago, according to a Reuters survey of 18 fund managers, currency traders and analysts conducted from Tuesday through Thursday. In addition to the ringgit, bets also turned bullish in currencies such as the Philippine peso, Thai baht and South Korean won. Bullish bets in the Indonesian rupiah increased slightly, and reached their highest level since May 2014.