Asian currencies had their biggest weekly gain in almost two months as signs that the US Federal Reserve will delay raising interest rates buoyed demand for emerging market assets.
The Bloomberg Dollar Spot Index fell this week for the first time since mid-August after minutes of last month’s Federal Open Market Committee (FOMC) meeting released on Wednesday showed officials were concerned that slowing global growth and a stronger greenback posed risks to the US economy. Futures traders cut bets to a 33 percent chance the Fed will raise its benchmark rate by July next year, down from 45 percent on Tuesday.
“The market had been very positively inclined toward the [US] dollar and then suddenly the Fed minutes have pulled the rug out from under them,” said Michael Every, head of Asia-Pacific financial markets research at Rabobank International.
The Bloomberg-JPMorgan Asia Dollar Index rose 0.2 percent this week, the most since Aug. 15 — to 115.04, after five weeks of losses.
A number of FOMC participants said the US expansion “might be slower than they expected if foreign economic growth came in weaker than anticipated,” according to minutes of the Sept. 16 and 17 meeting.
The strength of Asian currencies was fueled by speculation that data will show the region’s largest economy is improving, National Australia Bank Ltd said. Chinese exports probably increased 12 percent last month from a year earlier after a 9.4 percent gain the previous month, according to a Bloomberg survey before a report due on Monday.
The yuan rose 0.14 percent this week to 6.1309 per US dollar.
In Taipei, the New Taiwan dollar rose the most in four months on Thursday on the back of the Fed minutes release.
On Thursday, the NT dollar closed 0.3 percent higher at NT$30.430 against its US counterpart, prices from Taipei Forex Inc show — the biggest rise since May 30. The Taiwanese unit was steady this week, as markets closed on Friday for Double Ten National Day.
“The FOMC minutes pushed back investors’ expectations for a rate increase,” KGI Securities Investment Advisory Co Ltd (凱基證券投顧) president Chu Yen-min (朱晏民) said.
Meanwhile, in New Delhi, the rupee completed its biggest weekly gain since the period ended on Aug. 22 due to optimism that a retreat in Brent crude prices — which touched a four-year low this week — will help narrow India’s trade deficit. The country imports about 80 percent of its oil.
India’s rupee strengthened 0.5 percent to 61.3350 and Thailand’s baht gained 0.5 percent to 32.473, data compiled by Bloomberg show.
The IMF this week raised India’s growth forecast for this year from 5.4 to 5.6 percent and predicted that Asia’s third-largest economy will expand 6.4 percent next year.
South Korea’s won retreated 0.8 percent since Oct. 3 to 1,070.45 per US dollar this week.
Ten of 16 economists surveyed by Bloomberg forecast that the Bank of Korea will lower its benchmark interest rate to 2 percent on Wednesday, with one predicting a cut to 2.15 percent and five seeing no change.
Elsewhere in Asia, Indonesia’s rupiah dropped 0.4 percent to 12,223 per US dollar and the Philippine peso fell 0.1 percent to 44.77. Malaysia’s ringgit held steady at 3.2578, while Vietnam’s dong advanced 0.3 percent to 21,223.
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