Won Rises With Ringgit as Fed Rate Comments Drive Down Dollar

  • Korea’s currency climbs to strongest level since October
  • Ringgit completes biggest advance in more than two weeks

The won and the ringgit led gains in Asian currencies as the dollar dropped after the Federal Reserve said it was adopting a gradual pace toward tightening monetary policy.

South Korea’s currency advanced to the strongest in more than nine months and bond yields fell to records as traders trimmed bets U.S. policy makers will raise interest rates this year. A gauge of the dollar dropped for a third day after officials repeated that “economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate.”

“All that the Fed said in sum was ‘we’ll see’,” said Vishnu Varathan, a senior economist at Mizuho Bank Ltd. in Singapore. “There was no real capitulation from any commitment to hike this year.”

The won jumped 0.9 percent to 1,124.45 per dollar at the close in Seoul after appreciating to 1,123.35, the strongest since October. The ringgit strengthened 0.8 percent to 4.0493 per dollar, its biggest gain since July 11, according to prices from local banks compiled by Bloomberg.

Fed, BOJ

The Fed left its benchmark rate on hold at the end of its two-day meeting Wednesday. The dollar slumped in the absence of signs that Fed policy is set to further diverge from that of the Bank of Japan and European Central Bank, which are carrying out unprecedented monetary stimulus.

The market’s focus will now turn to Japan’s planned stimulus package, said Jeon Seung Ji, a currency analyst at Samsung Futures Inc. in Seoul. Prime Minister Shinzo Abe surprised markets on Wednesday with a fiscal-stimulus package exceeding 28 trillion yen ($267 billion). The Bank of Japan meets Thursday and Friday.

South Korea’s bonds rose, with the three-year yield dropping two basis points to 1.205 percent and the 10-year falling four basis points to 1.361 percent, both unprecedented closing levels.

The yield on Malaysia’s five-year notes fell two basis points to 3.23 percent, according to prices from Bursa Malaysia.

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