Asian currencies steady to firmer

Most Asian currencies were steady to firmer on Wednesday, with investors awaiting a news conference by US President-elect Donald Trump for further clues on his economic policies and the direction of the greenback. After gaining some respite this month as a short-covering rally in the offshore Chinese yuan triggered some buying back of Asian currencies, the focus now is on Trump's news conference due later on Wednesday.
Asian currencies will be especially sensitive to what Trump says about China, said Kota Hirayama, senior economist for SMBC Nikko Securities in Tokyo. "As long as Trump doesn't say anything extremely harsh against China, the impact on Asian currencies may be limited," Hirayama said, regarding the near-term outlook.
During the election campaign, Trump threatened to brand China a currency manipulator on his first day in office on January 20 and slap high tariffs on Chinese goods sold to the United States. Asian currencies are likely to come under renewed pressure if the United States takes a hard-line stance against China on trade, which would raise concerns about the outlook for other export-reliant Asian economies, he added.
Asian currencies have retreated broadly over the past couple of months as US bond yields jumped on expectations that Trump's proposals for infrastructure spending and tax cuts will prop up US economic growth and inflation. The won was supported by dollar-selling by foreign players and foreign demand for South Korean shares. South Korean equities touched their highest level since July 2015 at one point and were last up 1.4 percent on the day.
Expectations that fourth-quarter earnings among South Korean firms would be stronger helped give a lift to the equity market.