Posted on 17 Sep 2015
Most emerging Asian currencies rose today, riding on the coattails of higher regional stocks, as the US dollar stepped back ahead of the two-day Federal Reserve policy meeting starting later in the day.
The South Korean won led regional gains, hitting a two-week high after Standard & Poor's raised the ountry's sovereign credit rating.
Asia-Pacific shares outside Japan rose nearly two per cent, tracking strength on Wall Street. The dollar eased against a basket of six major currencies.
Global markets have been on edge in the past few weeks in the run up to one of the most highly anticipated Fed meetings this week, as a growing number of analysts believe the first interest rate hike in the United States in almost a decade is near at hand.
Still, concerns over slackening global growth and the recent financial markets turmoil have tempered expectations of a Fed liftoff tomorrow.
Data yesterday underscored the difficulty for markets in second-guessing the Fed. Consumer spending in the world's largest economy grew at a fairly healthy pace over the past two months, although a separate report showed manufacturing remains soft. US bond yields held near 4-1/2 year highs.
“Structurally, we note that recent Asian FX resilience may well prove to be merely a near term respite,” said Emmanuel Ng, a foreign exchange strategist with OCBC Bank in a note, adding he saw negative signals from the net portfolio outflows environment in the region.
Reflecting these concerns, the Indonesian rupiah hit a 17-year low after the government's bond auction yesterday failed to meet the indicative target.
Won
The won ended local trade up 0.9 per cent at 1,175.9 per US dollar, its strongest since Sept 2, on strong demand from offshore funds.
Seoul shares advanced two per cent as foreign investors turned to net buyers in the local stock market after a selling streak in the previous 29 consecutive sessions.
S&P raised South Korea's rating to AA-minus from A-plus, commending the strength of its economic growth, decline in short-term debt component of external borrowings, and reduced foreign indebtedness of its banks.
Rupiah
The rupiah lost 0.4 per cent to 14,458 per US dollar, its weakest since July 1998.
Indonesia yesterday sold 5.2 trillion rupiah (RM1.52 billion) worth of conventional bonds, well below the indicative target of eight trillion rupiah.
Most government bond prices today fell with the 10-year yield hitting 9.474 per cent, its highest since January 2011.
The official Jakarta Interbank Spot Dollar Rate, which the central bank introduced in 2013 to manage exchange rate fluctuations, was fixed at 14,442 rupiah per dollar, its weakest since the launch.
The central bank was spotted intervening to stem further depreciation in the rupiah, the second-worst performing Asian currency so far this year, traders said.
Bank Indonesia is likely to keep its benchmark interest rate unchanged tomorrow, a Reuters poll showed, amid renewed pressure on the rupiah and inflation risks.
