Most Asian currencies firmed against the dollar on Wednesday after the euro's gains on upbeat German economic data weakened the greenback. The euro strengthened to 2-1/2 week highs as Germany's seasonally adjusted gross domestic product rose by 0.8 percent on the quarter, beating a Reuters poll, as buoyant exports and rising company investment in equipment boosted growth.
The dollar index that tracks the US currency against six major peers was at 93.812, its lowest level since late October and well below its overnight high of 94.542. The euro's rise is definitely supporting the Asian currencies but they are also being helped by some (Asian) central banks hinting at a possible review of monetary policy, said Chang Wei Liang, FX strategist at Mizuho Bank.
Bank Negara Malaysia said last week it may consider reviewing its current monetary accommodation given the strength of global and domestic macroeconomic conditions. Malaysia's inflation for full-year 2017 is expected to come in at the higher end of its forecast range of 3-4 percent.
The Philippine central bank raised its inflation forecast for 2018 last week, but kept unchanged its estimates for this year and 2019. The central bank said it will consider a monetary policy review depending on how US Federal Reserve policy changes influence capital flows. Investors are also waiting for US October consumer inflation data due later on Wednesday which is expected to show a marginal increase in consumer prices.
If the US CPI numbers are softer than anticipated they could have an impact on Federal Reserve interest rate hikes and the dollar in the long term, said Chang Wei Liang, FX strategist at Mizuho Bank. The Korean won led the gains among regional currencies for a second day as it gained 0.4 percent, while Malaysia's ringgit was up nearly a quarter of a percent to its highest since November 2016.
The Indonesian rupiah, the Taiwan dollar and Chinese yuan also strengthened marginally. The Philippine peso firmed 0.2 percent and is on track for a sixth session of consecutive gains despite a fall in September remittances, which were down 8.3 percent on the year. The Philippines is one of the world's largest recipients of remittances, with millions of Filipinos working overseas sending home money that helps fund domestic consumption, a key driver of economic growth.
The Indian rupee rose 0.2 percent as oil prices fell more than 1 percent on Wednesday, continuing Tuesday's slide. Oil prices fell after the International Energy Agency cast doubts over the past few months' narrative of tightening fuel markets. India, Asia's second-largest oil importer after China, has been under pressure lately as rising oil prices could widen its current account deficit.