Most emerging Asian currencies and bonds rose on Thursday, helped by expectations that the European Central Bank will likely extend its asset-purchase programme at its policy meeting later in the day, keeping investors on the hunt for higher returns in Asia.
China's exports and imports unexpectedly rose in November, indicating a pick-up in the world's second-largest economy and major trading partner of other Asian countries. The South Korean won and the Taiwan dollar hit near one-month peaks on equity inflows.
Indonesia's rupiah raced to a near four-week high on solid demand for local bonds among foreign investors. Bucking the trend, the Chinese yuan edged down on local corporate dollar demand. The ECB will extend its already generous asset buys, aiming to boost stubbornly weak price growth, although with much of its firepower exhausted, it may also debate sending a token signal about the eventual end of such purchases.
"Asian currencies could strengthen further as the ECB's easy stance is likely to spur more rallies in emerging-market assets, while a Fed rate hike view in December is fully priced in," said Jeong My-young, Samsung Futures research head in Seoul, referring to the Federal Reserve. The US central bank is widely expected to raise interest rates next week. The won rose nearly 1 percent to 1,156.5 per dollar, its strongest since November 10.
Seoul shares had advanced 1.3 percent by mid-afternoon as foreign investors were set to extend their buying spree to a third straight session. The South Korean currency pared some of its gains with a chart resistance line at 1,157.9, the 50 percent Fibonacci retracement of its depreciation since Donald Trump's victory in the US Presidential election, analysts said. But the won may strengthen to 1,151.0, the 61.8 percent retracement, once the level is cleared, they added.
Investors were closely watching Friday's impeachment vote in parliament on President Park Geun-hye, although markets almost ignored the finance ministry's concerns about further risks to the economy from "domestic issues." The Taiwan dollar gained 0.6 percent to 31.699 per the US dollar, its strongest since November 10, in thin trading. Foreign financial institutions bought the Taiwan dollar, with local stocks up more than 1 percent.
The island nation's stock market reported combined inflows of T$8.5 billion ($268.0 million) for the previous two sessions. Importers purchased the US dollar for payments on dips, limiting the Taiwan dollar's upside. The rupiah advanced 0.3 percent to 13,275 per dollar, its strongest since November 11. Most Indonesian government bond prices rose with the 10-year yield at 7.691 percent, its lowest since November 14.
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