South Korean won leads Asian currencies' rise on US dollar weakness

South Korea's won leads Asian gains, rising about 0.37 per cent against the US dollar. — Reuters pic
South Korea's won leads Asian gains, rising about 0.37 per cent against the US dollar. — Reuters pic

SINGAPORE, March 14 — The South Korean won led gains as most Asian currencies rose against the US dollar on today, with the departure of US Secretary of State Rex Tillerson, coupled with benign inflation data, pulling the carpet out from under the greenback.

US President Donald Trump fired Tillerson yesterday, replacing his chief diplomat with loyalist CIA Director Mike Pompeo, marking the departure of yet another moderate from the White House.

The US dollar retreated following the announcement, over fears that the move may sow further turmoil in the already tumultuous Trump administration. It was also stung by inflation data that matched low expectations, affirming the possibility of only three Fed rate hikes for the year.

“I think Asian currencies are still tracking what's broadly happening to the dollar, which was softer on the back of the secretary of state announcement,” said Khoon Goh, head of Asia research at ANZ Banking Group (Singapore).

“Now that inflation numbers from the US are out, the focus is very much on the Fed meeting next week. The rate hike is fully priced, but more important is whether the Fed might raise its outlook to four hikes for the year.”

Regionally, The South Korean won led gains and rose about 0.37 per cent.

South Korea's finance minister said the lack of jobs growth was the country's biggest economic issue, after data showed unemployment went unchanged in February.

The Thai baht rose about 0.3 per cent to highs versus the US dollar not seen in more than four years.

The Chinese yuan rose about 0.1 per cent on the US dollar after news of better than expected industrial output in the first two months of the year.

However, gains were capped by the prospect of steep tariffs on goods exported from China to the United States, particularly in the technology and telecommunications sectors.

Indian rupee

The Indian rupee bucked the trend, falling as much as 0.25 per cent to the US dollar.

The Reserve Bank of India (RBI) barred all lenders from issuing letters of undertaking — a form of credit guarantee at the heart of a major fraud — as embattled Punjab National Bank isclosed its total exposure in the case had risen by another US$145 million (RM566 million).

“The market is just reacting to the news of the RBI banning a key financing tool, which has seen demand for the dollar rise onshore,” Goh said. — Reuters

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