Dollar stabilizes in Asia as markets start slow recovery


SINGAPORE: The dollar strengthened against emerging market currencies in Asia on Monday as traders shook off the effects of a lower interest rate outlook from the US Federal Reserve.

The greenback last week struggled on the foreign exchange markets after the Fed on Wednesday pulled back their expectations on rate increases in 2016 by about a half percentage point, citing weak global growth and recent market turbulence.

At around 0430 GMT, the Taiwan dollar was down 0.12 percent against the greenback, the Philippine peso was 0.19 percent lower, the Indonesian rupiah was 0.23 percent off, and the Australian dollar lost 0.24 percent.

The dollar bought 111.44 yen, down from 111.55 yen in New York.

Japanese markets were closed for a bank holiday.

The euro was flat at $1.1270.

Analysts and traders are awaiting US February home sales data due Monday, which will offer an indication of the strength of the domestic economy.

Brisk sales in January are expected to continue into February.

While the US currency may be due a rebound, it may not return the dollar index to the more-than-decade high reached in January, Christopher Hine, a foreign-exchange strategist in New York at Credit Suisse Group AG, told Bloomberg News.

“The dollar’s been absolutely crushed across the board, so you would expect, tactically, somewhat of a bounce from here,” he said. “It’s how much can it actually reclaim, and for us it has to be a lot for it to change our more defensive bias.”

In a note to clients, DBS Bank economists questioned how much longer the Fed’s announcement would have an effect on the markets, and noted that with last week’s rise in oil prices, the Fed’s attention could soon be turned to inflation. AFP



Please follow our commenting guidelines.

Comments are closed.