Asian FX rise after Fed meeting; Singapore dollar jumps to over 5-yr high
Singapore dollar touches highest since January 2018
Philippine peso hits more than seven-month high
Indonesia's rupiah at more than four-month high
Fed's Powell remarks boost risk appetite
By Upasana Singh
Feb 2 (Reuters) -The Singapore dollar hit its highest level in more than five years on Thursday, while currencies across emerging Asia surged as U.S. Federal Reserve Chair Jerome Powell's comments on disinflation boosted risk sentiment.
Singapore's dollar SGD= appreciated 0.2% to 1.3038 per U.S. dollar, its highest since January 2018, and has been on an upward trajectory this year helped by rising expectations of easing inflation and less aggressive monetary tightening this year.
"The Singapore dollar NEER (nominal effective exchange rate) has retreated from the top towards the mid-point of (the Monetary Authority of Singapore's) policy band, a sign that policy focus may start to shift from inflation towards economic slowdown," said DBS Bank foreign exchange strategist Philip Wee.
Among other regional currencies, the Philippine peso PHP= surged 1% to hit its highest since June 20. Indonesia's rupiah IDR= firmed 0.7%, its highest in more than four months. The Malaysian ringgit MYR= rose 0.6%.
South Korea's won KRW=KFTC appreciated 1% to hit a 10-month high. The Thai baht THB=TH was up 0.1%.
"The Fed, struggling to convince markets of its hawkishness, may provide further upsides for Asia currencies," analysts at MUFG Bank said in a client note.
The Fed raised interest rates by a widely expected 25 basis points (bps) on Wednesday, with Powell saying a "disinflationary process has started" - a sign markets interpreted as signalling the end of its rate-hiking cycle is near.
"While Powell did say he doesn't see the Fed cutting rates this year, the absence of any forceful push-back against market expectations for rate cuts somewhat lent support to sentiment," said OCBC currency strategist Christopher Wong.
The dollar index =USD, which measures the greenback against six major peers, fell to a nine-month low of 100.80 following Powell's remarks. FRX/
Meanwhile, South Korea's consumer inflation rate ticked up in January to a three-month high but, driven mostly by temporary effects, left investors still confident that the central bank had ended its cycle of interest rate rises.
Last month, most of the Bank of Korea's board members were seen turning cautious about additional rate hikes, though the board voted that day to raise rates by 25 bps to 3.50%.
Stock markets in the region were broadly higher, with equities in Taipei TWII advancing 0.9% and leading gains. Indonesia's benchmark index .JKSE rose 0.4%, while stocks in Kuala Lumpur .KLSE inched 0.2% higher.
Equities in Manila .PSI, Singapore .STI and Bangkok .SETI were outliers in the region, declining between 0.1% and 0.8%.
HIGHLIGHTS:
** India's Adani Group will review its capital raising plan once the market stabilises, after Adani Enterprises Ltd ADEL.NS withdrew a $2.5 billion share sale citing the need to insulate investors from potential losses
** Technology giant Samsung Electronics Co Ltd 005930.KS and peer SK Hynix Inc 000660.KS are among top gainers on South Korea's benchmark .KS11
The following table shows rates for Asian currencies against the U.S. dollar at 0353 GMT.
COUNTRY | FX RIC | FX DAILY % | FX YTD % | INDEX | STOCKS DAILY % | STOCKS YTD % |
Japan | JPY= | +0.29 | +1.98 | .N225 | 0.07 | 4.97 |
China | CNY=CFXS | +0.44 | +2.77 | .SSEC | 0.29 | 6.64 |
India | INR=IN | +0.12 | +1.10 | .NSEI | 0.00 | -2.70 |
Indonesia | IDR= | +0.67 | +4.67 | .JKSE | 0.42 | 0.59 |
Malaysia | MYR= | +0.64 | +3.87 | .KLSE | 0.17 | -0.50 |
Philippines | PHP= | +0.98 | +3.26 | .PSI | -0.80 | 6.29 |
S.Korea | KRW=KFTC | +0.98 | +3.71 | .KS11 | 0.73 | 10.34 |
Singapore | SGD= | +0.17 | +2.75 | .STI | -0.43 | 3.43 |
Taiwan | TWD=TP | +0.93 | +3.43 | .TWII | 0.92 | 10.07 |
Thailand | THB=TH | +0.12 | +5.64 | .SETI | -0.13 | 0.89 |
Reporting by Upasana Singh in Bengaluru; Editing by Christopher Cushing
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