Asian currencies broadly firmer as dollar slumps
Reuters|
Jan 12, 2018, 01.22 PM IST
Asian currencies were broadly firmer on Friday, as the dollar slumped in the wake of weak factory inflation data and hawkish comments from the European Central Bank.
The euro firmed against the dollar on Thursday after minutes of the ECB's December meeting suggested that policymakers could soon start preparing markets for the end of the central bank's massive stimulus scheme.
Meanwhile,US producer prices in December fell for the first time in nearly 1.5 years amid declining costs for services, which could temper expectations that inflation will accelerate in 2018. That further added to weakness in the dollar.
"The US dollar was hammered on the back of mildly hawkish European Central Bank minutes and a big miss onUS December PPI which fell for the first time in 16 months," said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader, in a note.
The Korean won led gains among regional currencies, firming 0.8 per cent. However, the won was on track for its first weekly loss in five weeks.
The Malaysian ringgit strengthened 0.4 per cent and was on track to end the week 0.6 per cent higher.
The Indian rupee firmed 0.2 per cent, ahead of the release of inflation data later in the day.
India's retail inflation likely rose to a 17-month high in December, boosted by increased prices for some foods and the impact of higher pay for government employees, a Reuters poll showed.
A pick-up in inflation could push the central bank to tighten monetary policy, as India's central bank restated a neutral stance in December but said that "all possibilities are on the table" depending on how price pressures and growth pan out.
BAHT
The Thai baht strengthened 0.3 per cent, and was on track to end the week 1 per cent higher, the best among regional currencies.
Thailand expects to receive investment proposals of 720 billion baht ($22.56 billion) this year, up 12 per cent from 2017, the investment promotion agency said on Friday.
The nation's solid fundamentals and continued bond portfolio inflows continue to support the rise of the baht, said Qi Gao, FX Strategist (EM Asia) at Scotiabank.
YUAN
The Chinese yuan strengthened 0.3 per cent, after data showed China's December exports beat analyst estimates and the trade surplus rose to $54 billion, the highest since January 2016.
Exports from the world's second-largest economy beat forecasts, up 10.9 per cent from a year earlier, while imports missed market expectations, rising only 4.5 per cent, official data showed.
Chang Wei Liang, FX strategist at Mizuho Bank, said that despite the softening in import numbers, exports were in line with expectations and the trade balance blew past market forecasts. This could offer incremental support for the yuan given that exporters are likely to keep a bid on the yuan for now.
ASIAN CURRENCY POSITIONING
Investors raised bullish bets on most Asian currencies over the last three weeks, as the dollar was hit by uncertainty over the pace ofUS rate increases, the euro rally and possible tapering of Japanese stimulus.
Among regional currencies, long positions on the Indian rupee reached its highest since August 2017, while the yuan saw bullish positions being raised to their most since Sept. 9.
The following table shows rates for Asian currencies against the dollar on Friday.
The euro firmed against the dollar on Thursday after minutes of the ECB's December meeting suggested that policymakers could soon start preparing markets for the end of the central bank's massive stimulus scheme.
Meanwhile,US producer prices in December fell for the first time in nearly 1.5 years amid declining costs for services, which could temper expectations that inflation will accelerate in 2018. That further added to weakness in the dollar.
"The US dollar was hammered on the back of mildly hawkish European Central Bank minutes and a big miss onUS December PPI which fell for the first time in 16 months," said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader, in a note.
The Korean won led gains among regional currencies, firming 0.8 per cent. However, the won was on track for its first weekly loss in five weeks.
The Malaysian ringgit strengthened 0.4 per cent and was on track to end the week 0.6 per cent higher.
The Indian rupee firmed 0.2 per cent, ahead of the release of inflation data later in the day.
India's retail inflation likely rose to a 17-month high in December, boosted by increased prices for some foods and the impact of higher pay for government employees, a Reuters poll showed.
A pick-up in inflation could push the central bank to tighten monetary policy, as India's central bank restated a neutral stance in December but said that "all possibilities are on the table" depending on how price pressures and growth pan out.
BAHT
The Thai baht strengthened 0.3 per cent, and was on track to end the week 1 per cent higher, the best among regional currencies.
Thailand expects to receive investment proposals of 720 billion baht ($22.56 billion) this year, up 12 per cent from 2017, the investment promotion agency said on Friday.
The nation's solid fundamentals and continued bond portfolio inflows continue to support the rise of the baht, said Qi Gao, FX Strategist (EM Asia) at Scotiabank.
YUAN
The Chinese yuan strengthened 0.3 per cent, after data showed China's December exports beat analyst estimates and the trade surplus rose to $54 billion, the highest since January 2016.
Exports from the world's second-largest economy beat forecasts, up 10.9 per cent from a year earlier, while imports missed market expectations, rising only 4.5 per cent, official data showed.
Chang Wei Liang, FX strategist at Mizuho Bank, said that despite the softening in import numbers, exports were in line with expectations and the trade balance blew past market forecasts. This could offer incremental support for the yuan given that exporters are likely to keep a bid on the yuan for now.
ASIAN CURRENCY POSITIONING
Investors raised bullish bets on most Asian currencies over the last three weeks, as the dollar was hit by uncertainty over the pace ofUS rate increases, the euro rally and possible tapering of Japanese stimulus.
Among regional currencies, long positions on the Indian rupee reached its highest since August 2017, while the yuan saw bullish positions being raised to their most since Sept. 9.
The following table shows rates for Asian currencies against the dollar on Friday.
