The South Korean won led gains among Asian currencies on Thursday, buoyed by the government’s plans to boost the economy and an improved outlook for the electronics sector, while most others were little changed ahead of the holiday season.
The won strengthened 0.4 percent against the greenback, making it the top performer in the day.
South Korea cut its 2020 economic growth forecasts, but pledged more fiscal spending and tax support to revive the economy. The finance ministry also noted that global research agencies had forecast that prices of computer memory chips, the country’s top export item, would pick up next year.
“The semiconductor industry was supposed to see a bottoming in the second half of this year….it was of course hijacked by a blowup of tensions between US-China on the tech front, and the Japan-Korea tensions didn’t help so it became a supply side issue,” said Vishnu Varathan, a senior economist at Mizuho Bank.
“So far that they are able to get past that, then there could be a case for a gradual and modest recovery in demand rather than a continued slump.”
The Taiwan dollar, which also stands to highly benefit from an improvement in global demand for electronics, gained 0.2 percent to the dollar.
Taiwan’s central bank is likely to leave its policy rate steady later in the day, due to an improvement in the export outlook despite a protracted US-China trade war, a Reuters poll showed.
Meanwhile, most other Asian currencies in the region were languid ahead of the holiday season, barely reacting to US President Donald Trump’s impeachment.
“I think if anything really hits us in the face today is the conspicuous lack of direction and perhaps interest in some of the things that have been going on,” Varathan said, adding that markets seem to be in a comfortable place and would not want to get anymore ahead with it.
The Indonesian rupiah edged lower, with focus locked on to Bank Indonesia’s policy meeting later in the day, where it is expected to keep policy rates steady after a 100 basis point cut so far.
The Chinese yuan firmed 0.1 percent, while the Thai baht was flat.
Thailand’s central bank left its key rate unchanged at a record low on Wednesday, while it cut its growth forecasts for this year and next as exports take a hit from the Sino-US trade war and a strong baht. — Reuters
