Asian currencies were mostly steady on Friday as investors cautiously awaited a global central bank conference, but most regional units were poised to end the week with solid gains. The South Korean won was up nearly 1 percent for the week as tensions on the Korean peninsula eased, while the Philippine peso was set to register a weekly gain after two consecutive weeks of declines.
The Malaysian ringgit, Indian rupee, Taiwan dollar were all on track for weekly gains. The Thai baht, however, was the biggest decliner for the week, after Thailand's customs-cleared annual exports fell short of expectations. On Friday, regional currencies stuck to narrow ranges as investors cautiously awaited global central bankers' speeches at the Federal Reserve's annual symposium in Jackson Hole, Wyoming.
While neither Federal Reserve Chair Janet Yellen nor European Central Bank President Mario Draghi was expected to deliver any fresh policy messages, investors remained wary of any comments which could prompt selling of regional currencies. Such hawkish comments from the ECB and the Fed might not affect the euro or the dollar so much, but could put upward pressure on yields, said Nizam Idris, head of strategy, fixed income and currencies at Macquarie Bank.
Higher US yields could push the dollar up against emerging market currencies, Idris said. On the other hand, some analysts said a dovish stance from the central banks could provide some leeway for some Asian central banks to consider cutting rates, as the dollar could weaken further.
This month, India and Indonesian central banks cut their policy rates in efforts to boost their economies, and Rob Carnell, head of research at ING in Singapore, expects Thailand could be next in line to cut. The Philippine peso was down 0.2 percent on the day, but was up 0.7 percent for the week. Its gains came after the central bank warned traders on Monday that it would intervene in the currency market to curb any speculative activity.
The peso is Asia's worst performing currency so far this year, with a 2.7 percent decline. On Friday, the central bank said it is in firm control of the peso's exchange rate and is confident that the country does not face a foreign exchange crisis. The peso has recently plumbed 11-year lows, partly due to expectations that the Philippines could post its first current account deficit in 15 years for 2017. "I maintain a negative view on the peso," said Macquarie Bank's Idris. "You need some more time for the currency to do its 'magic' and boost exports and subtract imports to balance its current account a little bit more."
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