SINGAPORE: Emerging Asian currencies slid on Thursday as broad strength in the dollar prompted traders to book profits from their recent gains ahead of the European Central Bank's policy meeting.
Thailand's baht led regional losses after the Bank of Thailand on Wednesday said it is ready to act if the currency's moves affect the economy.
The Indonesian rupiah eased ahead of Bank Indonesia's monetary policy decision later in the day. The central bank is expected to keep its benchmark interest rate on hold.
Malaysia's ringgit slumped on the dollar's broad strength. The greenback held firm against a basket of six major currencies, with the euro particularly weaker ahead of the ECB's meeting later in the day.
ECB President Mario Draghi is likely to drive home the case for ultra-loose monetary policy, hitting back after a barrage of criticism from German officials who dispute the bank's recipe for tackling the euro zone's economic malaise.
Emerging Asian currencies, however, recouped some of their earlier losses as regional equities stayed near 5-1/2-month highs after oil prices rallied over 4 percent overnight.
Easier monetary policies of major central banks including the ECB and the Bank of Japan may continue to draw investors towards higher yields and support regional currencies, analysts said.
"Asia FX will rebound in the coming sessions on capital inflows backed by easier monetary policies of the ECB and the BoJ, unless the euro drops sharply (giving a broad lift to the dollar) after the ECB meeting," said Qi Gao, an emerging Asian currency strategist for Scotiabank in Hong Kong.
"But from May, emerging Asian currencies are likely to decline versus the dollar ahead of June FOMC and Brexit referendum on June 23," he said, referring to the US Federal Open Market Committee and Britain's possible exit from the European Union.
BAHT
The baht slumped as caution over possible intervention by the Bank of Thailand prompted traders to ease off on currency, which hit a one-month high on Wednesday.
Foreign investors were also net sellers in the Thai bond market in the previous five sessions.
Thailand's government bond prices slid.
RINGGIT
The ringgit fell as investors booked profits from the best-performing emerging Asian currency so far this year on the dollar's strength.
The Malaysian currency pared some of earlier losses as traders bought it around the session low of 3.8990 per dollar after the country's strong sale of Islamic bond.
Earlier, the government said it has successfully priced a $1.5 billion dual-tranche benchmark sukuk, which was oversubscribed by 4.2 times.
Most of the government bond prices rose.
Comments
Comments are closed for this article.