Most Asian currencies firmed on Tuesday, with South Korea’s won leading the gains, as rising hopes of stimulus measures from global central banks and governments to limit the economic damage from the coronavirus epidemic put a floor under risky assets.
US President Donald Trump pledged to take “major” steps to shield the economy against the impact of the coronavirus outbreak soon after the Federal Reserve stepped up the size of its fund injections into the battered markets.
“It is becoming clear that central banks cannot be the only game in town and the government needs to step in,” Maybank analysts wrote in a client note, as speculations mounted that more coordinated measures could be expected across the globe.
Markets worldwide plumbed fresh lows in the previous session, with the US dollar getting pummeled after a price war between Saudi Arabia and Russia triggered the biggest daily rout in oil prices since the 1991 Gulf War.
Global equities were also battered, as investors fled to safer assets, pushing the US 10-year Treasury yield to a record low, while the Japanese yen surged against the dollar.
However, the greenback gained some ground on Tuesday and Treasury yields ticked higher amid stimulus chatter but remained below 1 percent.
A gradual drop in the number of coronavirus cases reported in China brought a semblance of stability in Asian markets, keeping the yuan afloat, said Khoon Goh, head of Asia research at ANZ.
“A stable yuan is helping to keep rest of the Asian currencies well anchored.”
The Chinese yuan rose 0.2 percent to 6.934 against the dollar, lending added support after the country’s central bank pegged the currency at a firmer-than-expected level.
The South Korean won, whose fortunes are largely aligned with China’s economic stability, strengthened 0.9 percent. Also helping sentiment was a dip in the rate of reported coronavirus infections in the country.
The trade-sensitive Taiwanese dollar added 0.6 percent. The country reported a surprise jump in February exports late on Monday.
The Indonesian rupiah gained 0.6 percent after losing more than 1 percent in the previous session.
The country’s financial minister comforted markets on Tuesday by expressing readiness to launch all the policies implemented during the 2008 financial crisis, a day after stating that full-year budget deficit would likely widen.
The Malaysian ringgit dropped as much as 0.4 percent to a near two-week low against the dollar.
The currency is underperforming its regional peers since Malaysia is a large LNG exporter and weak oil prices ultimately tend to hurt exports from the country, ANZ’s Goh commented. – Reuters
