Most emerging Asian currencies rose on Friday and were set to see weekly gains as the Bank of England's larger-than-expected monetary stimulus helped investors keep seeking higher yields in the region while markets braced for key US jobs data. Taiwan's dollar hit a near one-year high on equity inflows and exporters' demand for settlements with the central bank not seen stemming its strength yet. The Malaysian ringgit gained following an unexpected rise in June exports and overnight rebounds in oil prices.
Inflows into South Korea's stock market threatened to drive the won past 1,110 per dollar, which traders said the foreign exchange authorities were seen defending. The Indonesian rupiah edged up as the Southeast Asia's top economy grew faster than expected in the second quarter.
The BoE on Thursday cut interest rates to a record-low 0.25 percent and pledged to buy 60 billion pounds ($78.8 billion) of government bonds with newly created money. The central bank also announced two new stimulus schemes to deal with the economic shock dealt by Britain's vote to leave the European Union.
Investors were awaiting data on US July nonfarm payrolls due later on Friday. US employers were predicted to have added 180,000 jobs last month, according to a Reuters poll of economists. "The BoE's steps were more aggressive than expected. That alleviated recent frustration on global policy stimulus," said Jung Sung-yoon, a foreign exchange analyst at Hyundai Futures in Seoul, taking the Bank of Japan's recent decision to maintain bond buying steady as an example of disappointment.
"Risky assets, including emerging Asian, could find more support if tonight's NFP (non-farm payrolls) is solid, but below 200,000," Jung said. A number above that and a surprisingly weak figure could hurt regional currencies, he added. Sentiment on most emerging Asian currencies grew more positive in the last two weeks as investors kept searching higher yields in the region with expectations of further global stimulus measures, a Reuters poll showed on Thursday.
The Taiwan dollar strengthened 0.5 percent to 31.566 per the US dollar, its strongest since August 11 last year, extending its gain so far this week to 1.1 percent. Scotiabank's emerging Asian currency strategist Qi Gao said the Taiwan dollar is seen strengthening further as global stimulus could spur more inflows. "We would sell the pair on rallies in the coming sessions with a target of 31.25," Gao said, referring to the US dollar/Taiwan dollar.
He said the won is another beneficiary. The South Korean currency has advanced 0.8 percent throughout this week as foreign investors resumed buying shares. Caution prevailed over possible intervention by South Korea's foreign exchange authorities to curb the won's strength. On Tuesday, South Korea's vice finance minister said the country will take appropriate measures to stabilise the foreign exchange rate if market moves become excessively one-sided, as the won hit more than 13-month highs. The authorities were also suspected of intervening that day, with traders estimating they bought more than $1 billion.
The ringgit has risen 0.8 percent so far this week as oil prices gained. India's rupee has risen 0.3 percent so far this week as investors welcomed the long-awaited passage of a goods and services tax, although concerns remained over the amount of work needed to bring the reforms into reality. The Chinese yuan has eased 0.1 percent for the week, while sentiment on the currency remained stable.
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