SINGAPORE, Nov 22 — Asian currencies firmed today on the back of a weakened US dollar after Federal Reserve chair Janet Yellen stuck by her prediction that US inflation would rebound but added she was “very uncertain” of it happening.
“She mentioned quite specifically that inflation expectations could be drifting lower, which is something she has not spoken about before,” said Nizam Idris, head of strategy, fixed income and currencies at Macquarie Bank.
“Basically, she has cast some doubt over the Fed’s previous view that the low inflation that we see currently is transitory in nature.” Idris said.
“So, both those twists in her opinions in my view are dovish and therefore I think the dollar has weakened from those comments.”
The US dollar index, which measures the greenback against a basket of six major currencies, fell from a one-week high of 94.165 overnight.
Among Asian currencies, the Malaysian ringgit strengthened over 0.4 per cent after central bank Governor Tan Sri Muhammad Ibrahim said the currency was “far from reflecting its fair value,” signalling a desire for the exchange rate to build on its recovery from a sharp selloff last year.
“BNM (Bank Negara Malaysia) would prefer a stronger ringgit to take the edge off rising prices given their latest forecast suggesting inflation wll be at the upper end of the forecast range,” Stephen Innes, head of trading APAC at Oanda, wrote in a note today.
Malaysia’s annual inflation rate is likely to moderate to 4 per cent for October from 4.3 per cent in September, according to a Reuters poll.
The Taiwanese dollar strengthened for a second day, gaining 0.3 per cent to 29.962 to the greenback, its highest in the more than two months.
Taiwan’s benchmark stock index rose 1 per cent to its highest level in over 27 years, propped up by information technology stocks.
The Singapore dollar traded marginally higher ahead of gross domestic product (GDP)and inflation data today. A poll by Reuters indicates the Monetary Authority of Singapore’s (MAS) core inflation measure in October likely rose 1.5 per cent from a year earlier.
Thailand’s customs-cleared trade data released yesterday showed exports climbed 13.1 per cent in October from a year earlier after rising 12.2 per cent in September, beating the median forecast of an 11.8 per cent rise from economists polled by Reuters.
However, imports zooming 13.5 per cent in October resulted in a trade surplus of US$210 million (RM868.7 million) for the month, well below the forecast of US$1.3 billion.
The baht gained 0.12 per cent to 32.74 after the data were published.
South Korean won
The won led the gains in Asia, gaining 0.45 per cent to 1,091 against the US dollar, on track for its second session of gains.
“BoK (Bank of Korea) has kept its policy rate unchanged amid steady growth and benign inflationary pressure. Nevertheless, the emergence of a dissenter calling for a rate hike as well as more hawkish comments from the governor in the latest meeting has signalled that the next move will be a hike,” wrote Vishnu Varathan, head, economics & strategy at Mizuho Bank in Singapore in a note.
The BoK is scheduled to hold a monetary policy meeting on Nov 30. — Reuters
Source: The Malay Mail Online