Asian currencies rallied against the dollar on Friday as investors took weakening of the greenback as a cue to buy into Asian markets, with the Chinese yuan hitting a near 21-month high. The dollar fell to a more than 2-1/2 year low against a basket of currencies, on track for its worst week in 17 weeks. The dollar has come under pressure from a number of reasons of late, ranging from tensions with North Korea to concerns over slowing economic growth in the United States.
The dollar also fell against the euro after the European Central Bank reaffirmed its ultra-easy policy stance by retaining rates at record lows. "Asian currencies are benefiting from some degree of dollar weakness, especially due to the ECB deliberating whether or not to reduce asset purchases at its October meeting, which is putting some downside pressure on the dollar," said Chang Wei Liang, FX strategist with Mizuho Bank in Singapore.
The Chinese yuan surged to a near 21-month high against the dollar. China's central bank raised its official yuan midpoint for the 10th straight session on Friday to its strongest since May 12, 2016. The Philippine peso rose to near one-month high against the dollar, edging up for its fifth consecutive session. The peso stands to gain about 0.9 percent this week.
The Indian rupee also rose to a one-month high, rising for a third consecutive session. The rupee is ontrack to end the week 0.2 percent higher. The Thai baht rose to a more than two-year high against the dollar, while the Indonesian rupiah stood at a near 10-month high.
The Chinese yuan surged to a near 21-month high against the dollar on Friday. China's August exports rose by 5.5 percent from a year earlier, roughly in line with expectations, while imports beat forecasts, growing 13.3 percent, official data showed. The currency is poised for its best week since its revaluation in 2005.
"Chinese FX reserves for August showed an increase for the 7th consecutive month, highlighting that capital outflow pressures are nearly exhausted," Mizuho Bank said in a research note. The Taiwan dollar surged to a three-year high against the dollar on Friday.
Taiwan's new premier, William Lai, on Friday said he would work to lure greater investment to the island, while continuing to push reforms in areas ranging from the energy industry to labour, pensions and tax. The currency is on track for its best week since mid-July.