The South Korean won was firmer on Friday, supported by hopes of a deeper thawing of relations after leaders of the two Koreas held a historic meeting, while most other emerging Asian currencies trod water ahead of key US economic data.
The won rose as much as 0.6 percent against the dollar, but was set to post its worst week in six. For the day, the currency, which is closely linked to inflows into the equity market, was the best performer in the region. North Korean leader Kim Jong Un and South Korean President Moon Jae-in met at the heavily fortified demilitarised zone between the countries on Friday in the first summit for the two countries in over a decade, sparking hopes of peace between the nations.
"What we are seeing right now, as the markets are continuing to buy into this drop in the geopolitical risk in the region, which in my view, from an equity perspective is massively amazing," said Stephen Innes, head of trading for Asia Pacific, Oanda. Most other currencies in the region traded in a tight range ahead of the release of US GDP data.
"Looking at the day ahead, tonight's GDP in the US is the clear highlight," Greg McKenna, chief market strategist at CFD and FX provider AxiTrader, said in a note. "Q1 is notoriously weak over the past decade so it's likely a weak number will be looked through." The US economy likely slowed in the first quarter as growth in consumer spending braked sharply, a Reuters survey showed, but the setback is expected to be temporary against the backdrop of a tightening labor market and large fiscal stimulus.
The dollar held near a 3-1/2-month high against a basket of currencies as higher US yields prompted an unwinding of short positions in the currency while the euro was hampered by a dovish tone from the European Central Bank. "I think the rise in US yields as a trend is there, its just a question of how fast," said Sim Moh Siong, FX strategist at Bank of Singapore.
"The dollar boost seems to be taking charge ahead of the Fed meet next week. The picture still stays positive for the dollar in the near term but in the medium, it's debatable whether it will last." The Indonesian rupiah was steady at 13,885 at 0518 GMT, but was set to finish the week slightly weaker, having experienced heavy foreign outflows. The country's central bank has tried to mitigate rupiah risks by buying sovereign bonds and selling foreign currencies.
Band Indonesia Governor Agus Martowardojo said on Thursday he would be prepared to adjust the benchmark interest rate if weakness in the rupiah currency threatened its inflation target or the stability of the financial system. The Singapore dollar, Indian rupee and Philippine peso were slightly firmer, while the Malaysian ringgit and the Thai baht were a touch weaker.
Taiwan's dollar recovered from five sessions of losses to rise 0.3 percent. The currency is headed for its fourth straight week of losses. The island's first-quarter economic growth data is due later in the day and is seen slowing given softening in global demand for technology goods.
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