Asia’s emerging market currencies edged higher on Friday following a jump in the yuan as Chinese markets reopened after a week-long break, underpinned by upbeat services sector survey and growing bets of a Biden victory in the US presidential elections.
The yuan jumped 1.3 percent to a 17-month high against the US dollar, catching up with gains in its offshore counterpart during the holidays in the mainland.
A softer US dollar, as investors wager on the likelihood of more stimulus measures if Democrats sweep the Nov. 3 election, also aided the yuan and the region.
The Philippine peso and Thai baht edged 0.1 percent and 0.2 percent higher respectively.
An industry survey showed growth in China’s services sector accelerated in September, suggesting its economic recovery is becoming more balanced and continues to gain momentum.
China is the main driver of growth in the region.
India’s rupee edged higher after the Reserve Bank of India (RBI) left its key interest rates unchanged as widely expected, while retaining an accommodative policy stance to support the coronavirus-ravaged economy.
RBI Governor Shaktikanta Das said the economy is expected to contract by 9.5 percent in the current fiscal year but will return to growth in the final January-March quarter, further lifting shares.
However, analysts remained cautious about whether the strength in local regional currencies could endure.
“I don’t know whether this rally could sustain, given the fact that we’re heading towards the US election and that there could be plenty of political uncertainties down the road,” said Margaret Yang, a Singapore-based strategist at DailyFX.
Philippine stocks dipped 0.2 percent and ended the week more than 1 percent lower.
The country reported its largest daily increase in COVID-19 deaths in more than three weeks on Thursday. There were also lingering concerns over a possible delay in passing a crucial $89 billion budget to rebuild its battered economy.
Data showing a sharp drop in both imports and exports in August added to concerns of underlying weakness of the Philippine economy. The peso is also Asia’s top performer so far this year.