Solid U.S. jobs data fans Asia FX; ringgit hits over 7-month high

Jul 04 2014, 12:20 IST
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Traders took some profits as Malaysia's trade surplus in May missed expectations. (Photo: Reuters) Traders took some profits as Malaysia's trade surplus in May missed expectations. (Photo: Reuters)
SummaryThe Philippine peso rose as the central bank is still expected to raise interest rates for the first time in three years.

Most emerging Asian currencies rose on Friday and were on track for weekly gains after surprisingly strong U.S. jobs data boosted risk appetites rather than cause worries that the Federal Reserve might start raising interest rates. The ringgit hit its highest level in more than seven months as investors expected inflows linked to 1Malaysia Development Bhd's (1MDB) plan to raise more than $3 billion through a stock market listing of its energy assets. The Philippine peso rose as the central bank is still expected to raise interest rates for the first time in three years as early as this month despite slower than-expected June inflation. Indonesia's rupiah gained on capital inflows and growing caution over possible intervention by the central bank to support the currency before Wednesday's presidential election. The dollar hovered near one-week highs against a basket of six major currencies after data on Thursday showed U.S. nonfarm payrolls (NFP) blew away most forecasts by rising 288,000 jobs in June. The healthy number bolstered Asian stocks and investors focused on growing risk appetites rather than expectations of a U.S. rate hike by the Fed. Emerging Asian currencies are likely to benefit in the short term from easier monetary policies of other major central banks, traders and analysts said. "It really depends on whether the post-NFP dollar euphoria can dislodge the search for yield amidst the current risk-on environment," said Emmanuel Ng, a foreign exchange strategist for OCBC Bank in Singapore. "That's the conundrum. Few are willing to join the Fed's party as yet, so carry may have legs yet," said Ng, adding that emerging Asian currencies are likely to stay firm for the time being. On Thursday, the European Central Bank left interest rates steady at record lows as expected, but said it stood ready to do more if necessary. Sweden's central bank slashed its key interest rate to 0.25 percent on Thursday, more than forecast. Such policies, along with a dovish Fed Chair Janet Yellen, caused investors to seek higher yields in Asia, helping regional currencies remain on the course for a second consecutive week of gains. So far this week, the rupiah has led regional appreciation with a nearly 1.0 percent rise against the dollar, according to Thomson Reuters data. At one point this week, the Indonesian currency had gained as much as 2 percent on expectations of a sizable trade surplus, but was pared when

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