Most emerging Asian currencies soar

Most emerging Asian currencies rose on Thursday and were set to enjoy monthly gains as sentiment improved on hopes policy makers would step up stimulus efforts to weather any negative economic impact from Britain's messy EU divorce. China's yuan, however, headed for a third month of losses. Mid-year corporate dollar demand for merger and acquisition stayed strong, while the central bank appeared to hold off from intervening to support the renminbi, traders said.
The South Korean won rose 0.8 percent to 1,150.5 per dollar, its strongest since June 24 when Asian markets were battered by Britain's vote to leave the European Union. Demand from exporters and custodian banks on stock inflows supported the won. Malaysia's ringgit advanced as much as 0.9 percent to 4.0050 per dollar, its strongest since last Friday, tracking higher government bond prices. Asian equities extended gains thanks partly to hopes major central banks will offer more stimulus in the wake of Brexit.
The prospects of additional monetary easings are likely to further drive investors toward higher yields in Asia, supporting regional currencies, some analysts said. "The Fed is unlikely to raise interest rates soon, while Europe and Japan may print more money," said Yuna Park, currency and bond analyst at Dongbu Securities in Seoul, referring to the US Federal Reserve. "That's not bad at all to emerging markets. The additional liquidity will come to emerging markets, especially Asia, in the second half."
While regional central banks are expected to cut interest rates, their yields are still higher than developed countries. Most emerging Asian currencies were already poised to post monthly rises, extending gains in the first half. Indonesia's rupiah and the won led regional gains, having risen around 3.5 percent each to the dollar so far June, according to Thomson Reuters data.
Earlier this month, both the Bank of Korea and Bank Indonesia unexpectedly cut borrowing costs. Those central banks may ease monetary policies further, analysts said. The rupiah found further support as the government is launching a tax amnesty programme, which is expected to cut its fiscal deficit. The ringgit has gained 2.4 percent in June, while the Singapore dollar has advanced 2.1 percent. Thailand's baht has risen 1.4 percent and the Taiwan dollar was up 1.1 percent. Still, many analysts believe the gains are temporary given uncertainties about the global economy after Brexit. The yuan has lost 1.0 percent so far June, while both the Indian rupee and the Philippine peso have slid 0.5 percent.