Most Asian currencies edged higher on Thursday after comments from European Central Bank chief Mario Draghi pushed the euro up against the dollar with regional foreign exchange following. Draghi said policymakers would discuss changing its bond-buying programme in the autumn, which was interpreted as a hawkish indication by markets. The Euro was last trading at $1.1632, after climbing as high as $1.1659 on Thursday, its loftiest peak since August 2015.
The dollar index, which was on track for its second successive weekly fall, was trading flat on the day at 94.3. "There are two things - the Euro rally post ECB meeting and the negative things coming out of the US with President Donald Trump and investigations into him being widened," said Sean Yokota, head of Asia strategy at Skandinaviska Enskilda Banken (SEB). "That is making the dollar weaker and Asian currencies stronger."
The Thai baht led the Asian currencies' gains on the day on the back of strong trade data for June. Thailand's customs-cleared exports rose for a fourth straight month in June, beating expectations. The Philippine peso was up about quarter of a percent, with traders citing profit taking on the dollar's recent rally against the currency. The peso hit an 11-year low against the dollar this week.
The South Korean won also edged up, on track for its second successive weekly gain. China's yuan slipped despite its central bank setting the yuan midpoint at 6.7415 per dollar, its strongest level since October 20. Most of the Asian currencies are positive so far this year, led by South Korean won, Singapore dollar and Thai baht . Some analysts are bullish that their rally could be sustained in the second half, with world economies improving.
"I think the bigger driver now is the global environment is better than before, with Europe stabilising as well," said SEB's Yokota. "That would make Asian currencies strengthen in the second half, because they are more export-oriented." The Indonesian rupiah was slightly higher on the day at 13,320 per dollar.
Indonesia's central bank on Thursday held its benchmark interest rate unchanged for a ninth straight policy meeting, although it said the economy likely grew more slowly than initially expected in the second quarter. Analysts said the central bank is unlikely to change its policy rate for the rest of the year.
"Three key indicators that we will continue to watch include domestic inflation, IDR exchange rate, and capital flows. Deterioration in any of the three factors will increase the risk of earlier-than-expected monetary policy tightening in Indonesia," said UOB in a report. "We are maintaining our end-3Q17 and end-4Q17 forecast for USD/IDR at 13,500 and 13,600 respectively."
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