Emerging market currencies make fresh gains

[TOKYO] The dollar declined further against some emerging Asian currencies Thursday on waning expectations of an early rise in US interest rates.

With last Friday's below-par US jobs report muddying the Federal Reserve's plans for lifting borrowing costs by the end of the year, many higher-yielding, or riskier, units have benefited.

Emerging market currencies have been hammered on recent months as expectations of a US rate rise built up and China's economic growth slowed. Beijing's shock devaluation of its yuan in August also triggered a sweeping selloff across global markets that wiped trillions in valuations.

That led to investors pulling their money out of higher-yielding, higher-risk economies such as Indonesia and Thailand as they looked for safer returns back in the United States.

However, with the Fed's rate plans now muddied, bets are on a 2016 hike, bringing some much-needed confidence back to emerging markets this week.

One of the main winners has been the Indonesian rupiah, which has been hammered for months. In early trade Thursday the unit was up 0.70 per cent, having advanced more than six percent since last week. However, it is still wallowing near 17-year lows.

Among other units the Indian rupee gained 0.69 per cent and the Philippine pesos rose 0.21 per cent, while South Korea's won gained 0.22 per cent.

The greenback also eased against its major counterparts. It fetched 119.95 yen in Asian trade, slightly down from 120.00 yen in US trade, while the euro stood at US$1.1251 against US$1.1237.

The single currency was also buying 134.96 yen 134.83 yen in New York late Wednesday.

On Thursday the euro retreated in reaction a larger-than-expected drop in industrial production in Germany, Europe's powerhouse, analysts said.

Traders are now awaiting the release Thursday of minutes from the Fed's September policy meeting to see if they can gather any clues about its plans for hiking rates.

Shinichiro Kadoda, currency analyst with Barclays Bank, Japan, said in a note to clients in the mid-to-long term, "we predict that the dollar-yen will likely move in the lower 120 yen level, based on a scenario that the Fed will postpone a rate hike" to March.

The ECB is also due to release its minutes later on Thursday.

AFP