The Singa-pore dollar hit an eight-month high on Friday and most Asian currencies were set to show weekly gains against the US dollar, after the Federal Reserve turned less hawkish in its expectations for US interest rate rises over the next nine months. The Singapore dollar reached a high of 1.3480 to the US dollar, the strongest level since last July. It later came off that high and was last down 0.4 percent on the day. A number of other Asian currencies touched multi-month highs against the dollar, including the Malaysian ringgit, which reached its strongest level since last August according to Reuters data.
Most Asian currencies were on track for weekly gains, as the dollar fell broadly after the US Federal Reserve kept interest rates unchanged on Wednesday and lowered its expectations for the number of interest rate hikes by the year end from four earlier to just two. Emerging Asian currencies could see more gains against the dollar over the next few weeks, said Sean Yokota, head of Asia strategy at Scandinavian bank SEB. Whether Asian currencies can see a more sustained rise, will hinge on whether data shows any improvement in China's struggling economy, Yokota added. "If that doesn't stabilise or start to show some improvement, then I think this dollar/Asia trade is finished," he said. "I don't think the housing, or the domestic demand story is coming back just yet," Yokota said about the Chinese economy, adding that China's third-tier housing market still has excess inventory.