Singapore dollar hits over 5-year high as Powell comments boost Asian FX
Singapore dollar hits highest since Jan. 2018
Philippine peso notches highest level since last June
Indonesia's rupiah at more than four-month high
By Upasana Singh
Feb 2 (Reuters) -Emerging Asian currencies strengthened on Thursday, with the Singapore dollar climbing a more than five-year peak, as U.S. Federal Reserve Chair Jerome Powell's comments on disinflation lifted 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 due to 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," DBS Bank foreign exchange strategist Philip Wee said.
Other regional currencies including the Philippine peso PHP=, Indonesia's rupiah IDR= and South Korea's won KRW=KFTC strengthened between 0.7% and 1% to hit multi-month highs against a softer dollar.
"The peso came under heavy fire last year after when the Fed started its rapid fire rate hike cycle. We're seeing the backside of that now and the peso is reacting as expected," ING senior economist Nicholas Mapa said.
Malaysia's ringgit MYR= rose 0.6%, while the Thai baht THB=TH appreciated 0.3%.
Asian currencies are in a sweet spot following Powell's presser which was less hawkish than feared, said Fiona Lim, senior FX strategist at Maybank.
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," OCBC currency strategist Christopher Wong said.
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/
India's rupee INR=IN inched 0.1% higher, while shares .NSEI shed 0.2% amid Adani group's deepening rout. The conglomerate shelved a $2.5 billion share sale, bringing its cumulative market capitalisation losses to $100 billion since last week's short-seller attack.
Stocks in Asia were broadly higher, with equities in Taipei .TWII advancing 1.1% and Indonesia's benchmark index .JKSE rising 0.3%. Stocks in Kuala Lumpur .KLSE and Bangkok .SETI were up 0.1% each.
Shares in Phillippines .PSI and Singapore .STI declined 1% and 0.5%, respectively.
HIGHLIGHTS:
** South Korean consumer inflation ticked up in January to a three-month high but, driven mostly by temporary effects, left policy outlook steady
** Indian 10-year benchmark yields down 3.2 basis points at 7.245%
The following table shows rates for Asian currencies against the U.S. dollar at 0554 GMT.
COUNTRY | FX RIC | FX DAILY % | FX YTD % | INDEX | STOCKS DAILY % | STOCKS YTD % |
Japan | JPY= | +0.28 | +1.98 | .N225 | 0.19 | 5.00 |
China | CNY=CFXS | +0.48 | +2.81 | .SSEC | 0.11 | 6.45 |
India | INR=IN | +0.09 | +1.07 | .NSEI | -0.15 | -2.84 |
Indonesia | IDR= | +0.74 | +4.74 | .JKSE | 0.33 | 0.50 |
Malaysia | MYR= | +0.59 | +3.82 | .KLSE | 0.13 | -0.54 |
Philippines | PHP= | +1.04 | +3.32 | .PSI | -0.96 | 6.12 |
S.Korea | KRW=KFTC | +1.00 | +3.72 | .KS11 | 1.02 | 10.66 |
Singapore | SGD= | +0.16 | +2.75 | .STI | -0.54 | 3.33 |
Taiwan | TWD=TP | +0.88 | +3.38 | .TWII | 1.14 | 10.31 |
Thailand | THB=TH | +0.28 | +5.80 | .SETI | 0.11 | 1.14 |
Reporting by Upasana Singh in Bengaluru; Editing by Rashmi Aich
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