Most emerging Asian currencies rose on Wednesday as upbeat Chinese trade data indicated signs of stabilisation in the world's second-largest economy, supporting risk sentiment and commodity prices. The Singapore dollar, however, slid ahead of the central bank's semi-annual monetary policy announcement on Thursday. Malaysia's ringgit hit its strongest level in more than eight months as oil prices touched four-month highs on Tuesday after a report that top producer Russia and Saudi Arabia have agreed to freeze output.
The Chinese yuan rose as data showing China's trade performance blew past expectations in March, with exports returning to growth for the first time in nine months. Regional stocks also extended gains. "The data adds to the growing list of factors such as firmer oil prices that are helping to keep risk sentiment supported and Asian FX generally firm," said Christopher Wong, senior FX strategist for Maybank in Singapore.
"Asian currencies may see a short-term technical correction, but the bias remains to buy Asia FX on dips." The Singapore dollar slid as traders and short-term speculators sold the second best-performing emerging Asian currency so far this year ahead of the central bank's policy statement due on Thursday around 0000 GMT. "The SGD is close to be overbought in the past 2 months, so today's weakening could be explained by a correction," said Nordea Markets' senior analyst Amy Yuan Zhuang in Singapore.
The Monetary Authority of Singapore is expected to maintain its monetary policy, but a number of analysts say an easing this year remains a possibility due to slow growth, low inflation and depressed global demand, a Reuters poll showed. The ringgit rose nearly 1 percent to 3.8430 per dollar, its strongest since August 3, tracking overnight strength in non-deliverable forwards. "Real money inflows are driving bond yields lower and along with rocketing oil prices the Ringgit is trading with gusto," said Stephen Innes, a senior trader for FX broker OANDA Asia Pacific in Singapore.
On Tuesday, Malaysia's 10-year government bond yield fell to 3.750 percent, its lowest since November 2013. The Malaysian currency pared some gains on Wednesday as traders booked profits from the best-performing Asian currencies with oil prices retreating in Asia. Some government bond prices also slid.