Most emerging Asian currencies firmed on Monday, with the Taiwan dollar leading the pack, as more countries moved towards easing coronavirus-related restrictions even though the threat of a new wave of infections loomed.
South Korea, which was lauded for its quick action on the pandemic, reported 69 cases over the weekend, most linked to an outbreak at a number of Seoul nightclubs and bars which authorities fear could turn into another major cluster of infections.
The won, however, shrugged off the news and firmed as much as 0.5% to a four-week high, in tandem with its peers.
"With lockdowns being eased across Europe and Australasia, as well as the US, and the rate of people dying falling in many countries, markets will likely ignore the threat of COVID-19 part two, staying with the momentum of the peak-virus trade," wrote Jeffery Halley, senior market analyst, Asia Pacific at OANDA.
Countries wrecked by the virus such as Spain and England announced preparations for a phased easing of lockdown measures as death tolls declined. Some Asia-Pacific nations, which have relatively smaller number of cases than European countries, took similar steps as well.
Despite a stronger greenback, regional currencies like the Taiwan dollar advanced 0.3%, while the Philippine peso and the Thai baht gained 0.2% each.
Also boosting investor sentiment were the Chinese central bank's lowering of short-term loan interest rates for April and promise on Sunday to unleash measures to support the economy.
However, the yuan eased 0.1% against the dollar.
Meanwhile, Wuhan, the epicentre of the new coronavirus outbreak in China, reported its first cluster of infections since the lockdown was lifted a month ago.
The Indonesian rupiah swung between positive and negative territories before trading little changed.
Southeast Asia's biggest economy is considering plans for a phased resumption of businesses as early as June 1 but the reopening proposals came amid mounting criticism for being slow to respond to the outbreak.
The Malaysian ringgit did not trade on account of a public holiday.
The Indian rupee weakened 0.2% after the government said late on Friday that it would sharply increase market borrowing in the fiscal year to March 2021 to cushion the blow from the pandemic.
Goldman Sachs analysts predict the government might have already missed its budgeted fiscal deficit target in 2020 and may see a steeper rise in bond supply next year.
"We expect supply-demand dynamics to be unfavourable in 2021, unless the central bank decides to play a larger role," they said.
India has been in a lockdown for eight weeks, causing massive losses to an already-ailing economy and prompting Moody's to forecast 0% growth for this year. Markets now await a second stimulus package from the government.
Comments
Comments are closed.