May 15, 2021

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Asian currencies benefit from weaker dollar after Fed

4 min read

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Asian currencies strengthened on

Thursday, benefiting from a slide in the U.S dollar to a near

nine-week low after the U.S Federal Reserve maintained a dovish

outlook and quashed speculation on early bond tapering.

U.S Treasury yields fell overnight, pulling the dollar along

with it, after Fed Chair Jerome Powell said “it is not time yet”

to begin discussing any change in policy, implying a

continuation of the central bank’s accommodative policy

settings.

“Asian currencies are seeing relief gains on the back of the

Fed’s sanguine outlook on inflation, which implies that U.S.

monetary policy is likely to remain accommodative and supportive

of inflows into Asia,” said Chang Wei-Liang, Macro Strategist

(FX and Credit) at DBS Bank.

“That said, the Fed’s dovish stance will be increasingly

challenged by improving U.S. data, with a robust U.S. recovery

taking shape now. As such, Asian currency gains could remain

restrained on expectations of an eventual Fed taper later this

year,” he added.

Though major indexes in Wall Street closed lower overnight,

stocks in Asia responded positively to Fed’s dovish stance, with

most markets trading in positive territory.

Indian shares jumped as much as 1.2% to mark a more

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than six-week high, as investors turn their attention to a slew

of blue-chip earnings.

The COVID-19 pandemic continues to rage on in the nation,

but many countries have now pledged to help with critical

supplies and vaccines.

Equities in South Korea gained 0.2%, boosted by

strong quarterly earnings. The won strengthened 0.45%

and was at its strongest in more than two months.

Indonesian stocks saw gains, while Taiwan

gained as much as 0.8% to notch yet another record high.

Markets in Malaysia were closed on account of a local

holiday.

Stocks in Bangkok extended gains from the previous

day and scaled a more than three-week peak, even as the country

continues to face the brunt of a third wave of coronavirus

infections. The baht gained 0.35%.

Thailand’s industry ministry said on Wednesday that the

country’s manufacturing production index rose in March for the

first time in 23 months, benefiting from improved global demand

and a low base effect high.

However, some analysts were skeptical about the performance

of Thai markets.

“A huge cloud of uncertainty over the COVID-19 situation

especially in the run-up to this long holiday could keep a lid

on the market’s upside though yesterday’s rebound helps brighten

the short-term market outlook” analysts at Philip Securities

wrote in a note.

Stocks in Manila suffered after President Rodrigo

Duterte extended restrictions on movement and gathering in the

capital and nearby provinces for two more weeks, as the

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Philippines battles one of the worst coronavirus outbreaks in

the region.

Highlights

** In the Philippines, top index loser was Bloomberry

Resorts Corp, down 2.84%

** Autocorp Holding PCL was up 12.8% and among the

top gainers on the Thailand’s SETI

** The biggest gainers in the NSE index were Tata Steel Ltd

gaining 1.69% and Bajaj Finance Ltd, up 1.4%

Asia stock indexes and currencies at

0359 GMT

COUNTRY FX RIC FX FX INDEX STOCKS STOCKS

DAILY YTD % DAILY YTD %

% %

Japan -0.03 -4.95 0.21 5.87

China +0.11 +0.87 0.17 -0.29

India +0.00 -1.73 0.77 7.13

Indonesia +0.21 -2.94 0.52 0.44

Philippines +0.07 -0.82 -0.73 -10.06

S.Korea +0.45 -1.97 0.15 10.88

Singapore +0.02 -0.29 0.06 13.28

Taiwan +0.22 +2.17 0.22 19.51

Thailand +0.35 -4.10 0.78 9.64

(Reporting by Harish Sridharan in Bengaluru; Editing by Kim

Coghill)

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Reuters

2021-04-29 01:20:10

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