Asian currencies rally as Yellen drives dollar lower; Malaysian ringgit at 7-month high

The ringgit has rallied more than 5% this month and the Singapore dollar is the second best with a 3.6% rise from February closing.

The drop in the US dollar has driven Asian currencies broadly higher and the Malaysian unit traded at a new multi-month high on Wednesday.

The greenback was dragged lower late Tuesday by the fed Chair Janet Yellen as she highlighted the downside risks to faster rate hikes in the world's largest economy.

The USD/MYR pair dropped to 3.9540 on Wednesday, its lowest since August last year, and from the previous close of 3.9688.

So far, the ringgit has rallied more than 5% in the month and the Singapore dollar is the second best performer with a more than 3.6% rise from February closing.

The Singapore dollar had posted a sharp jump of over 1% on Tuesday, and on Wednesday, it extended the gains to 1.3522/US dollar.

The USD index, the gauge that measures the greenback's trade-weighted strength against a basket of major currencies, slipped further on Wednesday, adding to the 0.4% and 0.8% daily slides posted on Monday and Tuesday respectively.

Currently, the index is hovering near 95.0, not far away from the 5-month low of 94.58 hit on 18 March.

Global economic and financial uncertainties justify taking a slower path to raising interest rates, Yellen said in a speech at the Economic Club of New York.

Tuesday's Fed comments underscored the cautious tone at the central bank's latest policy meeting in mid-March, which had surprised markets and weakened the greenback broadly.

Several senior Fed officials had talked hawkish last week, helping the US currency recoup some of its losses but the Chair's statement on Tuesday got the greenback back to defensive.

The Chinese yuan also rallied sharply in the spot market. USD/CNY slipped to 6.4843 from the previous close of 6.5085 translating to a 0.37% gain in the yuan on the day.

Wednesday's momentum helped the Indonesian rupiah to move off a 1-month low and gain about 0.4% on the day to 13,345/US dollar.

The Indian rupee had yesterday risen back near the 3-month high of 18 March, and on Wednesday, it held near the previous day's high of 66.32/US dollar.

The Indian rupee has strengthened more than 2.7% so far this month while its Thai and Chinese counterparts have registered over 1% gains. The Indonesian unit is not far from the last month's close but still with a 0.5% positive margin.