April 23, 2018, 7:45 am
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Most Asia FX down

Most emerging Asian currencies made only modest moves on Tuesday, with gains capped as a retreat in the euro helped the US dollar strengthen against most of its counterparts.

The greenback rose to a more than one-week high against a basket of other major currencies on Monday, supported by a fall in the euro as investors were cautious after a months-long rally. 

“I think this is a bit of a reversal of the trend that we have seen in the last few weeks, wherein most Asian currencies had been doing quite well as the US dollar was in decline,” said Vishnu Varathan, senior economist at Mizuho Bank.

“But now the dollar has rebounded, particularly against the euro...I think the impetus for Asian currencies to push on without a strong backer isn’t compelling.”

However, a full-blown correction in local currencies is unlikely as Asian equities remain attractive to investors. Varathan believes Tuesday’s lacklustre movements in currencies were a “measured correction”, instead of “a brutal sell-off”.

Asian shares edged higher on Tuesday, approaching record highs, with MSCI’s broadest index of Asia-Pacific shares outside Japan rising 0.2 percent to 590.89, not far from its record peak of 591.50 scaled in November 2007.

The Philippine peso weakened the most among the regional currencies, slipping 0.2 percent to a near three-week low.

The Japanese yen was the top percentage gainer in the region, after the Bank of Japan trimmed its buying of long-dated Japanese government bonds in market operations. – Reuters 
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