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Asia: Tokyo leads markets rally as dollar surges
[HONG KONG] Asian markets headed into the weekend on a positive note Friday, with Tokyo again being propelled by the weaker yen as the dollar presses on with its impressive surge against global currencies.
With traders virtually 100 per cent certain that the Federal Reserve will hike interest rates before Christmas, the dollar is cruising along, hitting record highs against India's rupee and the Turkish lira and hitting multi-month highs elsewhere.
The surge has come hand in hand with a rally across world markets since Donald Trump's shock election win, with dealers expecting his big spending, high tax plans will give a boost to the world's top economy.
However, there are some concerns inside emerging market governments about his campaign pledge to review global trade deals, which could lead to an era of protectionism and throw up huge US tariffs.
"There's this anticipation of the US raising rates that is a positive signal that the US economy is strong and that'll keep pushing additional inflows into the dollar," Niv Dagan, executive director at Peak Asset Management, told Bloomberg News.
"The fact that there are outflows out of emerging markets, like the Philippines, places a lot of pressure of their equity markets and we'll continue to see that stronger dollar as a negative."
In Asian morning trade the dollar was flirting with the 114 yen mark for the first time since March, providing more support for Japan's exporters and sending the Nikkei 0.8 per cent higher by the break.
Another weak reading on Japanese consumer prices meant any monetary tightening by the central bank was unlikely in the foreseeable future.
The greenback was also just off the record high against the rupee touched Thursday while it is also holding at the all-time high struck against the lira in late trade.
Among other struggling regional currencies, South Korea's won, the Indonesian rupiah, Malaysia's ringgit and the Thai baht were all at multi-month lows as traders drag their cash out to seek out better returns in the US.
Nicholas Teo, a strategist at KGI Fraser Securities in Singapore, said: "The dollar has been really strong in anticipation of Yellen's move next month and that strength in the US dollar is ultimately going to mean that emerging-market assets would be seen as disadvantaged."
In other stock markets, Hong Kong was up 0.2 per cent, Sydney gained 0.5 per cent and Seoul put on 0.2 per cent while Singapore jumped 0.7 per cent. There were also big gains in Wellington, Taipei, Manila and Jakarta. However, Shanghai slipped 0.9 per cent.