Asia currencies set for best month in six years on Fed rate bets

ASIAN currencies are set for their steepest monthly advance in more than six years, with the approaching end of the Federal Reserve’s tightening cycle supporting gains.

The Bloomberg JPMorgan Asia Dollar Index has rallied 2.7 per cent in November to head for its biggest monthly increase since March 2016. South Korea’s won is the best performer after logging a 7 per cent rise, followed by the Thai baht which climbed 6.8 per cent.

“While the Fed has clearly communicated further hikes, the bulk of dollar gains is now over,” said Eugenia Victorino, head of Asia strategy at Skandinaviska Enskilda Banken in Singapore. “Asian FX will have a chance to pare back some of their losses after a dismal year.”

To be sure, Asian currencies still have to contend with the risk posed by China’s virus outbreak, after rising anger against stringent curbs fuelled demonstrations over the weekend. Traders are awaiting Beijing’s next move, with analysts divided on whether the unrest will spur more lockdowns or hasten the nation’s exit from Covid Zero. BLOOMBERG