Asian FX trim losses after hawkish Fed propels dollar

BENGALURU: Emerging Asia currencies declined on Thursday after the Federal Reserve’s first rate hike in more than three years and a hawkish tone pushed the US dollar to a seven-week high, while regional stocks pared gains.

MSCI’s gauge of emerging markets currencies was down 0.2 percent, paring earlier losses, as the index fell to its lowest level since August 21, extending declines to a sixth consecutive session.

The US central bank’s rate hike and hawkish guidance strengthened the dollar to a seven-week high and pushed US yields higher, pressuring regional currencies.

The rupiah declined 0.5 percent to its lowest in two weeks at 17,765 against the greenback, and the won dropped to a three-week low of 1,384.40 per dollar.

The index dialled back gains after South Korea’s KOSPI , which dominates the index along with the Taiwan stock index, erased earlier gains of nearly 1.2 percent to end flat on the day.

Taiwan’s main stock index ended nearly 1 percent higher.

Equities in Indonesia and the Philippines added as much as 1 percent each to the MSCI gauge, and Thai stocks rose as much as 1.4 percent. Malaysian stocks were down 0.3 percent.