Robust China data lifts Asian currencies, Singapore dollar slips on soft outlook
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SINGAPORE, Oct 13 — Rosy Chinese data and the soft US dollar lifted emerging Asian currencies today, except for the Singapore dollar which dipped on the central bank's cautious outlook for the economy.
China's yuan perked up to its highest in three weeks and was headed for weekly gains, helped by weakness in the US dollar and encouraging trade data.
Exports rose 8.1 per cent, below forecasts of 8.8 per cent but handily beating August's 5.5 per cent.
Imports in dollar-denominated terms grew 18.7 per cent in September from a year earlier, beating analysts' forecasts for a 13.5 per cent expansion and accelerating from 13.3 per cent in August.
The gain was stronger than the most optimistic forecast in a Reuters poll of analysts.
The trade data also showed China's iron ore imports vaulted to a record high in September as the world's top steel producer imported ore to raise production ahead of the winter crackdown on air pollution.
“China trade data seems to be making the big risk appeal in the region and it seems to be the overriding factor today,” said Stephen Innes, senior trader at FX broker OANDA.
Softness in the US dollar also added cheer to the emerging Asian currencies. The greenback was muted as investors cautiously awaited inflation data which could shed more light on whether the US Federal Reserve will hike interest rates later in the year.
Among Asian currencies the Indian rupee appreciated for a fifth consecutive day, rising to levels unseen since September 25 after data showed that the country's retail inflation remained steady in September.
The report also showed that the chances of a rate cut remain dim as the central bank expects higher inflation in the coming months.
The Malaysian ringgit picked up marginally. The world's second-largest palm oil producer said it planned to accelerate its crude palm oil export tax to 6.5 per cent in November.
The Philippine peso is staying afloat after being a hair's breadth away from an 11-year dip at one point.
“I think we need to take a more balanced view on the peso. Investor optimism in the country's relatively high growth prospects is reflected in the record high stock market,” said Philip Wee, senior currency economist at DBS Bank.
“The growth is, however, accompanied by the return of the first twin (budget and trade) deficit since 2002, and inflation rising back above the 3 per cent policy rate. This is reflected more in the Philippine peso,” Wee said.
The Thai market was closed for a market holiday.
The Singapore dollar retreated, breaking a four-day winning streak as the central bank cited the likelihood of a slowdown in growth in 2018.
The Monetary Authority of Singapore keep its neutral stance on monetary policy settings and maintained the local currency's policy band, the pace at which it can appreciate against a basket of rivals, at zero per cent.
“The benign tone for inflation and the cautious outlook for 2018 growth to be slightly below this year are likely to dampen expectations for a tightening at the next review in April 2018,” DBS Research said in a note.
Meanwhile, the trade-reliant economy's gross domestic product growth outpaced expectations in the third quarter.
On a weekly basis the currency appreciated, after four straight weeks in the red. — Reuters