Asian FX rally pauses as quarter-end flows support dollar, easing tensions help won

29 Mar, 2018

"Asian currencies have been on a back foot today, partly due to month-end and quarter-end rebalancing demand for the dollar," said Khoon Goh, head of Asia research at ANZ Banking Group.

"Once we get past the month-end rebalancing demand for the dollar, we should see the Asian currencies resume their appreciation this week."

The Malaysian ringgit, after three successive gaining sessions this week, fell 0.1 percent on Thursday, while the Singapore dollar, Thai baht and Taiwan dollar were trading flat.

The South Korean won rose 0.4 percent on optimism over North Korea's Leader Kim Jong Un's recent visit to China. After his visit, China said the North Korean Leader pledged his commitment to denuclearisation and to meet US officials.

Sentiment was also lifted due to an agreement reached by the United States and South Korea this week on a revised trade pact.

A South Korean government official said on Thursday that disclosing details of actions taken by currency authorities is likely to ease concerns about the country being labelled a "currency manipulator" by the United States, lending some support to won.

Most other regional currencies were subdued against the dollar.

China's yuan inched up slightly despite a much weaker official fixing.

India and Philippine currency markets were closed due to holidays.

After facing sharp declines in February, Asian currencies have rebounded this month, led by the won and ringgit, on easing trade and geo-political tensions.

The JPY/KRW pair, which some analysts say is the best proxy to express fears of trade war, has fallen 4 percent this week.

MALAYSIAN RINGGIT

The ringgit was down 0.1 percent on Thursday after gaining over 1 percent this month, bolstered by high oil prices and foreign flows.

Analysts are more positive after Bank Negara Malaysia's comments that its economy is expected to grow at a faster pace

than forecast earlier.

"Macro backdrop has turned more favourable for the ringgit," ANZ's Goh said.

The following table shows rates for Asian currencies against the dollar at 0609 GMT.

Copyright Reuters, 2018
 

 

 

 

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