KUALA LUMPUR – Asian currencies rose on Thursday as investors saw the resignation of US Federal Reserve vice chair Stanley Fischer as a sign that it will be even more cautious about raising interest rates again, implying further weakening in the dollar.
“We could read into the Stanley Fischer surprise overnight, considering that he was leaning towards interest rate normalisation. I think the market thinks that now the chance of interest rate normalisation may get delayed further,” said Stephen Innes, senior trader at OANDA.
The US dollar hit a multiyear low against the Canadian dollar on Wednesday after the Bank of Canada surprised many by raising interest rates, but rose against the yen albeit marginally, as worries over the Korean peninsula favoured the popular safe-haven currency.
“Any downside dips across Dollar-Asia will be more a reaction to positive risk appetite levels and broad USD gyrations, as opposed to inherent support from net portfolio capital inflows in the short term,” OCBC Bank said in a research note.
Among Asian currencies, the South Korean won rose to a near one-week high against the dollar after the White House said it was suspending internal discussions on terminating the US trade agreement with South Korea.
The Taiwan dollar rose to a more than three-month high against the dollar.
The Taiwan dollar has been gaining steadily after former premier Lin Chuan resigned earlier in the week because of declining public support for President Tsai Ing-wen.
The Chinese yuan ticked up marginally after the central bank raised its official guidance rate for the ninth straight session.
“We expect the yuan to consolidate with a strengthening bias after the recent sharp rise,” Scotiabank said in a research note.
The Chinese yuan will only give up some of this year’s strong gains against the dollar over the next 12 months, provided the US Federal Reserve continues to tighten policy and gives the greenback a lift, a Reuters poll showed.
The Malaysian ringgit surged to a fresh near 10-month high against the dollar as investors looked forward to the Malaysian central bank’s decision on its benchmark rate later in the day, which is widely expected to remain unchanged, according to a Reuters poll.
“A standout in the region has been the Malaysian ringgit. If we consider yesterday’s export numbers, they were a rocking high, which is not a sign of a weak economy,” said Stephen Innes.
“The currency has been very stable and strong this year, which is appealing to investors,” Innes added.
Malaysia’s export growth in July rose 30.9% from a year earlier on higher shipments of manufactured products and mining goods, beating the 23.1% rise forecast by a Reuters poll.