Asian currencies climbed this week, led by South Korea’s won and Malaysia’s ringgit, on speculation the US Federal Reserve will raise US interest rates at a slower pace than market participants had envisaged.
There will not be a “smooth upward path” for rates, though a tightening will probably be warranted before year-end, US Fed Vice Chairman Stanley Fischer said on March 23.
The monetary authority last week dropped an assurance to be “patient” on the timing of its first increase since 2006. Brent recorded its biggest five-day gain in six weeks as Saudi Arabia’s bombing of rebel targets in Yemen, which is near the center of global energy trade, raised concern supplies will be disrupted.
“The market is still thinking about the step back in hawkishness we saw from the Fed last week,” Hong Kong-based Rabobank Group head of financial markets research Michael Every said. “We’ve got instability in the Middle East, so oil prices go back up again and naturally, that helps oil-linked currencies like the ringgit.”
The won gained 1.8 percent in the past five days versus the US dollar, its biggest weekly advance since August last year. The ringgit strengthened 1.3 percent as crude’s advance allayed concern about a drop in revenue for Malaysia, the only net oil exporter among Asia’s major economies. Indonesia’s rupiah climbed 0.4 percent.
The New Taiwan dollar had its biggest weekly gain in two months on speculation faster economic growth and a weaker greenback would attract inflows.
The NT dollar strengthened 0.6 percent from March 20 and 0.1 percent on Friday to NT$31.375 against the greenback, Taipei Forex Inc prices show. That is the biggest weekly advance since the period ending Jan. 24.
The yuan declined 0.2 percent this week as data added to evidence of a slowdown in the world’s second-largest economy. A preliminary gauge of manufacturing fell to an 11-month low this month, a private report showed, and economists surveyed by Bloomberg predict an official Purchasing Managers’ Index due on April 1 will be the lowest since August 2012.
Elsewhere in Asia, the Philippine peso advanced 0.1 percent this week, while Thailand’s baht declined 0.1 percent and India’s rupee retreated 0.2 percent.
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