Emerging Asian currencies rallied on Thursday as weak US sales data increased doubts over whether the Federal Reserve will raise interest rates before the end of this year, sending the dollar to seven-week lows. The Indonesian rupiah hit its strongest in more than four months on demand from foreign banks. Indonesia's chief economics minister said the rupiah's recent appreciation shows is now heading towards its "fundamental" value.
South Korea's won touched a three-month peak as the central bank left its policy interest rate unchanged, confounding some expectations of a cut. The Singapore dollar advanced to its strongest in more than two months on buying by real money funds, as the monetary authority's easing on Wednesday was less than some analysts had expected.
Malaysia's ringgit jumped more than 1 percent. The greenback hovered near its lowest since August 26 after data showing US retail sales barely rose in September and producer prices posted their largest decline in eight months. "We are seeing continuous unwinding of bearish bets on emerging currencies generally, as views of 'no US hike this year' are growing," said Seungji Jeon, Samsung Futures' FX analyst in Seoul.
"Asian currencies may extend gains as some of them broke major chart levels, although worries about China has slowed their appreciation," Jeon said, adding this year's underperformers in Asia such as the rupiah and the ringgit may lead the regional gains. The rupiah jumped as much as 3.1 percent to 13,200 per dollar, its strongest since June 3, briefly breaking a major technical resistance line at 13,318, a 200-day moving average. The Indonesian currency has been closing daily sessions weaker than the average since September 2014.
The rupiah pared some of the gains to be weaker than the average after data showing September exports and imports fell more than expected. The rupiah has another chart resistance point at 13,249, the 23.6 percent Fibonacci retracement of its depreciation from August 2011 to September 2015, analysts said. Once that resistance is cleared, 13,000 would be the next, they added. Investors were awaiting Bank Indonesia's monetary policy decision later in the day.
The central bank is widely expected to keep its benchmark policy rate on hold. The won gained as much as 1.5 percent to 1,130.0 per dollar, its strongest since July 13. The Bank of Korea left its base rate unchanged at a record low of 1.50 percent as it assesses recent signs of recovering domestic demand. Custodian banks bought the won as foreigners purchased the country's bonds, traders said. Caution increased over possible intervention by the foreign exchange authorities to stem the won's strength, traders said.
The South Korean currency has chart resistance at 1,132.2, the 38.2 percent retracement of its weakness from July 2014 to September 2015, analysts said. The next level is seen at 1,124.0, a 200-day moving average, they added. The Singapore dollar rose 0.4 percent to 1.3727 per US dollar, its strongest since August 3. The city-state's currency pared much of its earlier gains as leveraged funds and local banks sold the unit. It has chart support at 1.3759, the 50.0 percent retracement of its depreciation from April to September, analysts said. Once that level is broken, it may head to 1.3669, a 200-day moving average, they added.