Korean Won Jumps 1.1%, Ringgit Gains as Dollar Drops Second DayBy and
‘Risk-on sentiment remains very well supported’: Oanda Asia
Korean bonds rise ahead of BOK rate meeting on Thursday
The South Korean won jumped along with Malaysia’s ringgit as demand for the U.S. dollar weakened with traders betting the Federal Reserve will be gradual in any interest-rate increases.
A gauge of the dollar against its major peers retreated with odds in the futures market for a U.S. rate hike by year-end remaining below 50 percent.
“The overriding issue in the Asia basket is the Goldilocks principle that the U.S. economy is healthy but not so buoyant enough to elicit any sort of Fed response,” said Stephen Innes, a senior trader at Oanda Asia Pacific Pte in Singapore. “Risk-on sentiment remains very well supported on the back of the perception that central banks are going to remain accommodative for the foreseeable future.”
The won rose 1.1 percent to 1,094.38 per dollar at the close in Seoul, gaining for a fifth day and reaching the strongest level since May 2015. The ringgit gained 1 percent to 3.9903 per dollar as of 5:55 p.m. in Kuala Lumpur, according to prices from local banks compiled by Bloomberg. The won and the ringgit were the best performing currencies in Asia Wednesday, along with the Japanese yen.
The MSCI Emerging Markets Index rose 0.5 percent, advancing for a fifth session, while the Kospi index of shares ended nearly flat.
South Korea’s bonds rose, with the yield on three-year sovereign notes falling three basis points to 1.22 percent, and that on 10-year debt dropping four basis points to 1.39 percent, according to prices from local banks compiled by Bloomberg.
The Bank of Korea is scheduled to hold a rate meeting on Thursday, where all 19 economists surveyed by Bloomberg expect policy makers to leave benchmark borrowing costs unchanged at a record-low 1.25 percent.
The yield on Malaysia’s 10-year government bonds was steady at 3.64 percent, while that on notes due 2021 was three basis points lower at 3.24 percent, according to prices from Bursa Malaysia.