Asian currencies gained last month by the most since September 2013, led by Malaysia’s ringgit and the Singapore dollar, on speculation the US Federal Reserve would delay raising US interest rates.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, rose 0.8 percent last month, as investors scaled back bets of an increase in rates by the Fed amid weak data on US economic growth, housing and manufacturing.
Global funds pumped a net US$7.4 billion into Taiwanese and South Korean stocks this month, as economic stimulus in China spurred demand for regional equities.
“The timetable for US interest-rate hikes could be pushed back a bit and that’s positive for Asian currencies,” said Ho Man Chun, a strategist at Bank of Communications Co’s (交通銀行) Hong Kong branch. “We’ve also seen capital inflows going into the region, especially for equities in North Asia.”
Malaysia’s ringgit rallied 4 percent last month, its best performance since January 2012, as a rebound in crude prices revived confidence in the nation, the only net oil exporter among the region’s major economies.
The New Taiwan dollar advanced 2.2 percent last month. Traders said the central bank took the rare step of intervening during the middle of the day on Thursday to weaken its currency, as stock inflows drove the currency’s biggest weekly jump since 2012.
The monetary authority asked banks to cancel currency orders shortly before the midday trading break, according to two traders who asked not to be identified, and the instruction was followed by a 0.6 percent retreat in the NT dollar in the final minute of the session.
The central bank did not ask lenders to cancel orders in the currency market, Department of Foreign Exchange Director-General Harry Yen (顏輝煌) said. Banks have always been required to report big orders as these may push up market volatility, he said, reiterating that the monetary authority would “smooth out” volatility at times of market “irregularities.”
The NT dollar rose 1 percent this week to NT$30.752 versus the greenback, Taipei Forex Inc prices showed, as foreign investors poured US$1.44 billion into local equities. It reversed daily advances of 0.2 percent in the final few minutes of the morning and afternoon trading sessions.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, sank 3.2 percent last month, poised for its biggest monthly decline since 2011.
Singapore’s dollar strengthened 3.8 percent last month, its best month since October 2011. South Korea’s won climbed 3.5 percent as global funds pumped US$3.96 billion into local equities last month, the most since July.
Elsewhere in Asia, Indonesia’s rupiah rose 0.9 percent and the Philippine peso gained 0.3 percent. Among the losers, Thailand’s baht dropped 1.3 percent, while China’s yuan weakened 0.1 percent.
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