Dollar retreat ahead of US jobs supports Asia currencies, yuan up

The yuan edged up as state-owned banks continued to provide dollar liquidity. — Reuters pic
The yuan edged up as state-owned banks continued to provide dollar liquidity. — Reuters pic

SINGAPORE, Dec 2 — Most emerging Asian currencies rose today and were headed for weekly gains, with China's yuan to post the best week in more than four months, as the dollar dipped ahead of US non-farm payrolls data due later in the session.

South Korea's won bucked the strength of its regional peers as foreign investors were poised to snap their recent buying streak in local stocks.

The country's opposition parties said they would vote on a motion to impeach scandal-tainted President Park Geun-hye on Dec 9, vowing to push ahead with a risky political move while her own party remains undecided whether to force her out.

The yuan edged up as state-owned banks continued to provide dollar liquidity.

The Malaysian ringgit advanced as crude prices extended gains, easing concerns over the country's oil and gas revenues. Some long-term foreign investors cut bearish bets on the third-worst performing Asian currency so far this year.

The U. dollar sagged against a basket of six-major currencies as investors were closely watching the US non-farm payrolls report due later today. Economists polled by Reuters expect US employers added 175,000 jobs in November, compared with 161,000 in October.

The greenback has been correcting after touching a 13-1/2-year peak as its gains inspired by US President-elect Donald Trump's policies were seen to be excessive.

“Unless we have a big positive surprise in the NFP tonight, the dollar may not rise much as its recent rises were too fast,” said Keonhyeong Ha, an economist at Shinhan Investment Corp in Seoul.

“It does not mean that the trend of weakening EM Asian currencies will be changed. To see a reversal, a rise in Treasury yields needs to slow down and markets need to have consensus that US monetary policy tightening will be modest.”

The 10-year US Treasury yield yesterday rose to the highest since June 2015, although it stepped back a bit today in Asia.

Emerging Asian currencies have been under heavy pressure as Trump's pro-growth policy stance backed by more fiscal spending is seen boosting US inflation and Treasury yields. Prospects also grew that the Federal Reserve may raise interest rates in 2017 after a hike this month.

Portfolio outflows from emerging markets already reached more than US$24 billion (RM106.7 billion) in November, HSBC said in a note.


Most emerging Asian currencies were set to post gains for the week.

The renminbi has strengthened 0.5 per cent against the dollar so far this week, which would be the largest weekly appreciation since late July. Stronger-than-expected Chinese manufacturing activity in November raised hopes that the world's second-largest economy picks up momentum.

China also took measures to curb capital outflows as the currency touched an 8-1/2-year low on Nov 24. It suffered weekly losses over the previous three consecutive weeks.

The won has gained 0.6 per cent against the dollar so far this week, as foreign investors bought a combined net 984.2 billion won (RM3.74 billion) worth of South Korean shares over the previous five straight essions.

Singapore's dollar has risen 0.4 per cent throughout the week, tracking the yuan's strength.

The city-state's currency closely follows the renminbi as traders and analysts believe the Chinese unit to be a part of the undisclosed currency basket used by the Monetary Authority of Singapore to manage monetary policy.

Indonesia's rupiah has appreciated nearly 0.3 per cent so far this week with most government bond prices up.

The Indian rupee, the ringgit and the Philippine peso have risen 0.2 per cent each throughout the week. — Reuters

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