Emerging Asian currencies rose broadly on Friday in thin trading ahead of the year end after encouraging data from the United States sparked buying in risky assets. Reports on Thursday showed jobless claims in the US fell to a 3-1/2 year low last week, while consumer sentiment in December scaled a six-month high, triggering a rally on Wall Street and a modest jump in risk assets world-wide.
The South Korean won led the broad rise in Asian currencies, climbing around 0.6 percent against the dollar. The Singapore dollar edged up 0.2 percent, supported by the improvement in risk sentiment and the euro's firmness versus the US dollar. Emerging Asian currencies have had a mixed performance so far in 2011, with most currencies faring worse than they did in 2010, as the eurozone's sovereign debt crisis and slowing global growth prompted investors to cut back on risk-taking.
With no quick fix to the eurozone's debt crisis in sight, investors will probably take a wait-and-see stance on Asian currencies in the first quarter of 2012, said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corp. But money could start flowing into these units around April or so, Okagawa said, adding that currencies of countries that have current account surpluses are probably the best bets.