Most Asian currencies ended Wednesday higher against the dollar, albeit on a rather unspectacular day of trading. With a few exceptions, markets traded quietly ahead of the Jackson Hole symposium (24-26 August) at which Fed Chairwoman Janet Yellen and ECB President Mario Draghi might give important updates on monetary policy.
The star of the day in Asia was without doubt the Korean won. The won had its best day in nearly a month yesterday, adding to what had already been a good start to the week. At 1125.75, the won is now 1.6% higher against the dollar than its lowest point on Friday.
The won suffered in the first three weeks of August on the back of the tense geopolitical situation involving North Korea, and has regained its footing as tensions have eased. For the next potential flare-up in hostilities, political and market commentators are looking to tomorrow’s (Friday 25th) North Korean holiday – The Day of Songun – because the same holiday last year marked the announcement by North Korea’s regime of an unprecedented submarine-launched missile test.
The outlook for Korea, and consequently for the Korean won, will remain cloudy according to most analysts. This week, analysts at Nomura expressed their belief that the won would continue to remain heavy regardless of what happens in North Korea.
Both offshore and onshore yuan ended yesterday marginally higher against the dollar. In today’s early trading, offshore yuan has reached an eleven-month high of 6.655. Onshore yuan will need to break 6.646 in order to achieve the same feat; it stands currently at 6.661.
The currencies of Malaysia and Singapore also appreciated marginally despite CPI readings for both countries coming in weaker than market forecasts. Annualized inflation to July for Malaysia and Singapore is now running at 3.2% and 0.6% respectively. USD/MYR ended the day at 4.278 and continues to trade with extremely low volatility in a tight sideways range. Like many pairs, USD/SGD has had a quiet August but, at 1.36, the Singapore dollar remains strong by recent standards.
Asia’s worst performing currency of the year, the Philippine peso, climbed to 51.06 yesterday and climbed further to test 51.0 early this morning. USD/PHP is unlikely to fall (the peso is unlikely to strengthen) any further than 51.0 in the short-term according to Scotiabank analyst Qi Gao.
Like the ringgit, the Taiwan dollar continues to do next to nothing. At 30.21, USD/TWD is virtually unchanged on its rate from May 1st.
The Japanese yen gained across the board, strengthening once again to sub-109 levels against the dollar as US yields fell. USD/JPY needs to break 108.6, and ideally 108.0, in order to bring some spark back to this pair.
Bucking the trend yesterday was the Thai baht – the only currency among Asia’s eleven most traded to post a loss against the dollar. The baht fell as exports rose less than expected and as Thailand’s Commerce Ministry announced its first monthly trade deficit in more than two years. Yesterday’s 0.3% fall does little, however, to dent want has been a stellar year for the baht. With a 7.4% year-to-date gain, Thailand’s currency retains its status as Asia’s top performer of the year. Scotiabank’s Qi Gao believes the baht will continue to outperform its regional peers going forward.
As always, readers can change money into or from any of the aforementioned currencies at exchange rates far better than those available at a typical Bureau de Change by using BestExchangeRates’ online comparison calculators for travel cash and foreign currency transfers.
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