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Units post weekly advance as Fed tempers rate bets

Published Sun, Oct 12, 2014 · 09:50 PM

Kuala Lumpur

ASIAN currencies had their biggest weekly gain in almost two months as signs the Federal Reserve will delay raising interest rates buoyed demand for emerging-market assets. The Bloomberg Dollar Spot Index dropped last week for the first time since mid-August after minutes of last month's Federal Open Market Committee (FOMC) meeting released on Oct 8 showed officials were concerned that slowing global growth and a stronger US dollar posed risks to the US economy. Futures traders cut bets to a 33 per cent chance the Fed will raise its benchmark rate by July, down from 45 per cent on Oct 7.

"The market had been very positively inclined towards the (US) dollar and then suddenly the Fed minutes have pulled the rug out from under them," said Michael Every, the head of Asia Pacific financial-markets research at Rabobank International in Hong Kong. "They showed the Fed is far more dovish than it had previously been expected to be." The Bloomberg-JPMorgan Asia Dollar Index advanced 0.2 per cent last week, the most since Aug 15, to 115.04. That followed five weeks of losses. India's rupee strengthened 0.5 per cent to 61.3350 per US dollar and Thailand's baht gained 0.5 per cent to 32.473.

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