Most Asian currencies strengthened on Friday with the US dollar weakened by a media report that investigators into possible Russian interference in the 2016 US presidential election had subpoenaed President Donald Trump's election campaign for documents. The dollar index was down 0.37 percent to 93.582 after the Wall Street Journal reported that Special Counsel Robert Mueller's team last month subpoenaed documents containing specified Russian keywords from more than a dozen officials.
"I think the Wall Street Journal report has impacted the dollar move this morning. Overnight, the dollar was somewhat firm. But ever since this news came out, broad-based weakness has been observed in it. This has helped the Asian currencies," said Sim Moh Siong, FX strategist at Bank of Singapore.
The greenback had edged higher overnight, bouncing back from a more than three-week low in the previous session, after the US House of Representatives passed a tax reform bill. The focus on the tax debate now moves to the Senate, where a tax-writing panel finished debating and approved a bill late Thursday evening. That measure has already encountered resistance from some within the Republicans ranks.
The Indian rupee and Japanese yen led the gains among the regional currencies. The Korean won firmed 0.4 percent to its highest since September 2016, on track for fourth consecutive session of gains. The currency gained 1.8 percent over the the week, its highest weekly gain since July 14. The Singapore dollar rose marginally after data on Friday showed that the city-state's exports rose the most in 2-1/2 years in October, well over double market expectations.
"The Monetary Authority of Singapore (MAS) rarely makes comments between the two semi-annual monetary policy committee meetings. But as an export-driven economy, strong exports could see MAS turning more hawkish in April 2018," said Qi Gao, FX Strategist (EM Asia) at Scotiabank. The Thai baht strengthened 0.3 percent to its highest since April 2015, while the Philippine peso and the Indonesian rupiah also climbed and were on track for weekly gains.
The Indian rupee firmed 0.8 percent against the dollar as Moody's Investors Services upgraded its ratings on the country's sovereign bonds on Friday. Moody's said it was lifting India's rating to Baa2 from Baa3 and changed its rating outlook to stable from positive as risks to India's credit profile were broadly balanced.
"The knee-jerk may be for bonds to rally (lower yields), in particular enjoying some relief from recent bond sell-off (yields being pushed higher). And in turn, this could feed into positive debt-fiscal-INR (rupee) dynamics," said Vishnu Varathan, senior economist at Mizuho Bank. The rating agency also said the recently-introduced goods and services tax (GST), a landmark reform that turned India's 29 states into a single customs union for the first time, will boost productivity by removing barriers to interstate trade.
Investors raised their bullish bets on most Asian currencies over the past two weeks, with long positions on the Malaysian ringgit at their highest since March 2016, a Reuters poll showed, as the dollar came under pressure after doubts about the prospects of US tax reform showed no signs of abating. Investors have increased their bullish bets on the ringgit, the South Korean won, and the Thai baht, the poll of 10 respondents showed.
Long positions on the Singapore dollar rose five-fold as investors became more optimistic about the pace of economic growth after factory activity in October expanded the most since December 2009. The Malaysian ringgit ticked up 0.4 percent against the dollar as the economy expanded 6.2 percent annually in the third quarter, its highest quarterly growth in more than three years. The growth in gross domestic product beat a median forecast of a Reuters poll, supported by robust private sector spending and strong exports.
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