Asian currencies rose for a second week after the US Federal Reserve signaled it would move gradually once it starts tightening policy, easing concerns of increased outflows from emerging-market assets.
A gauge of the US dollar was set for a weekly decline after US Federal Open Market Committee officials held their forecast for the US benchmark rate for the end of this year and lowered it for next year. Fed Chair Janet Yellen said she wants to see more “decisive” proof of a lasting economic turnaround.
“The main factor supporting Asian currencies was the dovish Fed,” said Sean Yokota, Singapore-based head of Asian strategy at Skandinaviska Enskilda Banken AB. “With their projections on interest rates lowered, that generally creates [US] dollar weakness.”
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, climbed 0.2 percent from Friday last week.
The New Taiwan dollar closed at NT$31.062 versus the greenback on Thursday, rising 0.5 percent from NT$31.226 on Friday last week. Taiwanese markets were shut on Friday for a holiday.
The NT dollar reached a midday high of NT$30.788 on Thursday, but it retreated after the central bank entered the market prior to the noon break and again before the close, two traders who spoke on condition of anonymity said.
“The central bank thinks the [local] currency is too strong, and is feeling the pressure from declining exports,” said Samson Tu (涂韶鈺), a fund manager at Uni-President Asset Management Corp (統一投信) in Taipei. “With the Fed planning to raise rates at a slower pace, funds may not be in a hurry to return to the US, which strengthens emerging-market currencies.”
South Korea’s won advanced 0.7 percent and India’s rupee rose 0.8 percent.
The Malaysian ringgit climbed 0.5 percent after declining to within 0.7 percent of a peg imposed for seven years through 2005 the previous week. The currency has weakened 7.1 percent in the past six months, the most in the region, on concern about a possible credit-rating downgrade and a decline in export earnings due to lower energy prices.
Elsewhere this week, the Philippine peso appreciated 0.1 percent, while Indonesia’s rupiah, China’s yuan and Vietnam’s dong were little changed. Thailand’s baht fell 0.1 percent.
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