1. Asian currencies recover on dollar profit-taking

Asian currencies recover on dollar profit-taking

Most of the Asian currencies edged up on Friday, trimming their losses on the week, as traders took profits in the dollar. The dollar index, up nearly 1 percent for the week, was set for its first weekly rise in five.

By: | Published: May 12, 2017 1:19 PM
The Indian rupee rose 0.14 percent to 64.283 per dollar, ahead of the inflation and industrial production data due later in the day.

Most of the Asian currencies edged up on Friday, trimming their losses on the week, as traders took profits in the dollar. The dollar index, up nearly 1 percent for the week, was set for its first weekly rise in five. It was down 0.1 percent on the day. “Obviously, there is bit of a profit-taking leading to more strengthening of Asian currencies. Asian currencies have weakened throughout the course of this week,” said Khoon Goh, head of Asia research at Australia and New Zealand Banking Group in Singapore. “There is net positioning clean-up heading into the weekend.”

The South Korean won was trading flat, but added nearly half a percent on the week. Moon Jae-in’s appointment as the new president propped up South Korean equities this week, with the Korea Composite Stock Price Index (KOSPI) hitting a record high on Wednesday. The Indonesian rupiah inched up, as the equity markets rose after declines in the last two sessions. China’s yuan was trading flat after the People’s Bank of China set the midpoint rate at 6.8948 yuan per dollar, about 0.15 percent firmer than the previous fix.

Overall, tensions over North Korea kept the regional currencies in check this week. Pyongyang’s ambassador to Britain, Choe Il, said in an interview with Sky News on Tuesday that North Korea was ready to conduct a sixth nuclear test. “We have ongoing tensions in North Korea. At the moment markets are not really pricing in too much of a risk premium around it. So if there is any escalation in that, then potentially it will lead to weakness in asset prices in this region,” Goh said. With China’s manufacturing and factory-gate pricing softening, the GDP figures from Thailand, Philippine and Malaysia, due next week, will be closely watched.

MALAYSIAN RINGGIT

The Malaysian ringgit was trading flat ahead of the central bank’s policy review on Friday. Most analysts expect the bank to keep the rate steady. “With resilient growth outlook, stable inflation dynamics and stabilised MYR for the time being, BNM (Bank Negara Malaysia) is expected to hold for now with the next move poised to be a hike in 6-12 months,” Mizuho Bank said in a note. Malaysia’s industrial production in March rose 4.6 percent from a year earlier, government data showed on Thursday, supported by strength in the manufacturing and mining sectors. The ringgit, which fell more than 4 percent last year, has gained 3 percent this year.

INDIAN RUPEE

The Indian rupee rose 0.14 percent to 64.283 per dollar, ahead of the inflation and industrial production data due later in the day. India’s inflation likely cooled in April due to lower food prices, according to a Reuters poll of economists, but the pullback may not give the Reserve Bank of India enough leeway to ease monetary policy anytime soon. Strong equities, which were hovering near record highs, lent support to the rupee, although analysts warn that stock valuations are stretched. Foreigners have sold Indian equities in eight out of the last nine sessions on a net-basis through Thursday, according to the exchange data.

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