Fed rate cut to boost Asia high-yielding currencies
Thursday, September 20, 2007
ASIAN currencies are set to climb higher versus the US dollar in the near-term after the Federal Reserve slashed its key interest rate by a hefty half-percentage point, with high-yielders benefiting the most.
Analysts are optimistic the Fed's move on Tuesday which could be the first in a series of cuts may shield the world's largest economy from a recession and help Asia's fast-growing economies, despite fears of credit market woes.
"In terms of Asia ex-Japan currencies, the immediate focus is risk appetite that has been boosted (by the cut)," said Callum Henderson, chief currency strategist at Standard Chartered Bank.
"In addition, economies in Asia ex-Japan should also benefit and the result will be currency rallies across the board."
Tim Condon, head of Asia research at ING, pointed to the high-yielding Indonesian rupiah and the Philippine peso and the Malaysian ringgit as units that would outshine their regional peers in the near-term.
"Currencies that under-performed during the sell-off are going to outperform."
That was already evident yesterday as the rupiah, peso and ringgit rose the most among Asia's currencies against the US dollar.
The rupiah jumped 1.8 per cent to about 9,220 per US dollar, while the peso shot up nearly 1.3 per cent to 45.55 per US dollar.
The ringgit rose about one per cent versus the US dollar.
Reuters
Analysts are optimistic the Fed's move on Tuesday which could be the first in a series of cuts may shield the world's largest economy from a recession and help Asia's fast-growing economies, despite fears of credit market woes.
"In terms of Asia ex-Japan currencies, the immediate focus is risk appetite that has been boosted (by the cut)," said Callum Henderson, chief currency strategist at Standard Chartered Bank.
"In addition, economies in Asia ex-Japan should also benefit and the result will be currency rallies across the board."
Tim Condon, head of Asia research at ING, pointed to the high-yielding Indonesian rupiah and the Philippine peso and the Malaysian ringgit as units that would outshine their regional peers in the near-term.
"Currencies that under-performed during the sell-off are going to outperform."
That was already evident yesterday as the rupiah, peso and ringgit rose the most among Asia's currencies against the US dollar.
The rupiah jumped 1.8 per cent to about 9,220 per US dollar, while the peso shot up nearly 1.3 per cent to 45.55 per US dollar.
The ringgit rose about one per cent versus the US dollar.
Reuters
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