Most Asian currencies firmed against the US dollar on Friday as market participants kept an eye out for local economic data to provide trading cues. The dollar itself weakened against a euro strengthened by European Union leaders striking a migration deal at their summit. The dollar index against a basket of six major currencies fell as much as 0.67 percent to 94.749 on Friday after having risen to as high as 95.534 on Thursday, a level last seen almost a year ago.
On a data-heavy day for the Asian region, Bank Indonesia (BI) was seen in a Reuters poll as likely to hike again its key interest rate on Friday following two hikes in May. The Indonesian rupiah firmed 0.17 percent on Friday, on track to end higher, after touching its lowest since October 2015 during the day. "Key to watch today is the BI rate decision - where another hike to 5 percent has already been discounted," OCBC analysts said in a note.
A Reuters poll found any BI rate hike would most likely be intended to boost the fragile rupiah and contain capital outflows. Indonesia's annual inflation is already seen slowing in June from a month earlier. Despite a rate hike in the offing, a Reuters positioning poll on Thursday showed short positions on the rupiah at their highest since October, 2015.
The Chinese yuan recovered from earlier losses and was on course to firm for the first time in seven sessions. The currency had lost as much as 0.29 percent during the session to touch its weakest against the dollar since mid-November, 2017. It has lost about 3.1 percent over the course of June. The People's Bank of China loosened the yuan's official midpoint fixing for an eighth straight session to 6.6166 to the dollar.
South Korea's won and Taiwan's dollar firmed 0.87 percent and 0.28 percent, respectively. Data on Friday showed the export-reliant South Korean economy posted industral output growth of 0.9 percent in May, beating the 0.5 percent expected from a Reuters poll. Singapore's dollar firmed 0.26 percent, while the Philippine peso was up about 0.06 percent.
Thailand is due to publish trade data on Friday and its baht slipped slightly. The Indian rupee's 0.3 percent gain set it on track to gain for the first time this week. The currency hit an all-time low of 69.09 to the dollar on Thursday and has lost 1.7 percent during June as investors have reallocated capital out of the country.
A 0.1 percent slip in Brent crude prices was a tailwind for the rupee's gains on Friday, given the importance of imported oil to the economy. India has adequate "firepower" in foreign exchange reserves to deal with the current volatility in the rupee, the country's Economic Affairs Secretary told reporters on Friday, with the fiscal deficit and currency reserves data expected later in the day.
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