EM ASIA FX-Asian currencies firm as dollar weakens after Fed meeting
(Adds text, updates prices)
By Patturaja Murugaboopathy
Dec 14 (Reuters) - Asian currencies rose against the dollar
on Thursday, as a guarded outlook from the U.S. Federal Reserve
on the economy weighed on the greenback following its widely
anticipated interest rate rise.
On Wednesday, the Fed raised key short-term rates by a
quarter of a percentage point, as expected, and projected three
more hikes in both 2018 and 2019, unchanged from the last round
of forecasts in September.
That disappointed some investors, who had expected the Fed
to raise its interest rate outlook next year, given robust
economic growth and lower unemployment levels in the United
States.
The dollar index, which tracks the greenback against
a basket of six major currencies, was down 0.06 percent at
93.370, after dipping 0.7 percent on Wednesday.
"Asian currencies strengthened this morning, largely on the
back of what the market perceived as dovish Fed hike," said
Khoon Goh, head of Asia research at ANZ.
"Also with U.S. 10-year Treasury yields falling after the
Fed's announcement, that is seen as positive for portfolio flows
into emerging markets including Asia as well."
The South Korean won and the Thai baht
led regional gainers, followed by the Indian rupee and
the Malaysian ringgit.
South Korea's vice finance minister said on Thursday the
government will prepare for the possible effects of the Fed's
interest rate increases on markets, although there was little
impact on Korean markets.
In the wake of move, China's central bank nudged its money
market interest rates upward, while the Hong Kong Money
Authority (HKMA) also raised the base rate through its overnight
discount window by 25 basis points.
Hong Kong tracks Fed rate moves because its currency is
pegged to the U.S. dollar.
ANZ's Goh said he doesn't expect any other central banks to
respond directly to the Fed rate hikes to defend their
currencies because Asian currencies are actually strengthening
and not weakening.
"For next year, we are looking at Malaysia, Korea, the
Philippines and Singapore starting to tighten their policy,"
said Goh.
"But that is largely in response to better growth rather
than responding to the Fed."
The central banks of Indonesia and Philippines will meet to
review rates later in the day and most analysts expect both to
stand pat.
Some analysts expect investors will start to book profits at
the end of the year following strong gains in emerging Asian
currencies.
The South Korean won, Thai baht and the Malaysian
ringgit have surged more than 10 percent this year, while
Singapore dollar and Taiwan dollar rose more
than 7 percent.
Investors cut their long positions on most emerging Asian
currencies in the last two weeks, a Reuters poll showed, with
bullish bets on the Indian rupee hitting the lowest since
January.
The following table shows rates for Asian currencies against
the dollar at 0444 GMT.
CURRENCIES VS U.S. DOLLAR
Change on the day
at 0444 GMT
Currency Latest Previous Pct
bid day Move
Japan yen 112.62 112.53 -0.08
Sing dlr 1.3465 1.3462 -0.02
Taiwan dlr 29.983 30.026 +0.14
Korean won 1087 1090.7 +0.37
Baht 32.450 32.57 +0.37
Peso 50.410 50.48 +0.14
Rupiah 13565 13580 +0.11
Rupee 64.32 64.43 +0.18
Ringgit 4.076 4.085 +0.22
Yuan 6.609 6.6195 +0.16
Change so far in
2017
Currency Latest End 2016 Pct
bid Move
Japan yen 112.62 117.07 +3.95
Sing dlr 1.3465 1.4490 +7.61
Taiwan dlr 29.983 32.279 +7.66
Korean won 1087 1207.70 +11.13
Baht 32.450 35.80 +10.32
Peso 50.410 49.72 -1.37
Rupiah 13565 13470 -0.70
Rupee 64.315 67.92 +5.61
Ringgit 4.076 4.4845 +10.02
Yuan 6.609 6.9467 +5.11
(Reporting By Patturaja Murugaboopathy; Editing by Sam Holmes)