IBT-SG FX Week: Asian currencies at fresh highs on latest US policy cues; Trump in focus

Trump is scheduled to address a joint session of the lawmakers on Feb 28.

Major currencies
Major currencies Reuters

Asian currencies rallied to multi-week highs versus the US dollar in the week to Feb 24 as US policymakers' most recent comments are pointing to the likelihood of delayed rate hikes and tax reforms in the world's largest economy.

Financial markets across the globe are now waiting for Trump, who is scheduled to address a joint session of the lawmakers on Feb 28.

The Korean won rallied the most with a 1.8% gain on the week followed by the Singapore dollar which has advanced 0.98% against the greenback.

The Indian currency was the next best with a 0.66% rise ahead of Thai baht and Malaysian ringgit which were up 0.32% and 0.29% respectively.

The Indonesian rupiah and Hong Kong dollar were little changed while the Philippines peso bucked the trend with a 0.2% drop on the week.

The U.S. Treasury Secretary Steven Mnuchin on Thursday said that much work was still needed on key elements of a tax reform plan, one of the policies investors had anticipated would spur inflation and drive up U.S. interest rates.

The minutes of the latest Federal Reserve meeting, released on Wednesday, also continued to weigh down the dollar, as the details had shown that voting members did not show much urgency to tighten the credit conditions in the US.

The dollar fell more than 0.6% on Friday against the yen to 111.95, taking the USD/JPY pair to its lowest since Feb.

Rest of Asia

The Singaporean dollar at Friday's close of 1.4049/USD was the strongest against the greenback since the first week of November. So far this month, the Sing dollar is 0.5% up, adding to the 2.7% rally in January.

Major data this week from the City was consumer price inflation and industrial output data for January. While core inflation rallied beating market expectations, Friday's industrial data showed the output fell more than expected on a month-on-month basis.

Posting the steepest rally among its regional peers, the Korean won closed at a 4-month high versus the US currency. At Friday's close of 1130, the won was up 1.8% so far in the month, continuing the 4.8% rise last month.

Data on Friday showed that South Korea's consumer confidence increased to 94.4 in February from an eight-year low of 93.3 in the previous month. It was the first increase in four months.

For the Indian rupee, this week's close of 66.64 was its strongest weekly close since early October, making a more than a 4-month high. The unit is headed for its third straight monthly gain and it is now 2.9% stronger from November's close of 68.59.

The Philippines peso is hovering near a nine year low against the US dollar as of now and at Friday's close of 50.20, it was down 0.8% so far in the month.