HONG KONG: The Indonesian rupiah and Malaysian ringgit led an emerging market currency surge against the dollar in Asia on Thursday, while stock markets also rallied after more weak US data fuelled hopes the Federal Reserve will delay an interest rate hike.
High-yielding, or riskier, assets snapped back after a two-day sell-off that came on the back of renewed concerns that China’s economic growth crisis will seep through to other countries.
Equity and currency markets have enjoyed a broad advance so far in October after enduring the worst quarter for four years in the July-September period, with most of the gains coming from speculation the Fed will keep borrowing costs on hold.
In India, shares in Adani Enterprises surged after Australia’s government gave approval to a controversial project to build one of the world’s biggest coal mines. The announcement came just two months after the Federal Court blocked a Aus$16.5 billion ($12.1 billion) mine largely on environmental grounds.
On Wednesday the US Commerce Department said retail sales rose half as much as expected in September while it also revised down its August result.
Also Wednesday the Fed’s closely watched Beige Book report on the economy said that while expansion continued modestly the stronger dollar in recent months was “restraining manufacturing activity as well as tourism spending”.
The news comes after a below-par jobs report at the start of the month and adds to a sense that the world’s biggest economy is stuttering, giving the Fed more reason to hold off a rate rise.
With borrowing costs expected to remain at record lows in the near future investors moved into riskier assets. The rupiah surged 2.4 percent and the ringgit rallied 2.2 percent against the dollar in the morning before easing slightly to sit 1.7 percent and 1.5 percent higher respectively in late trade.
South Korea’s won was up 1.5 percent, helped by a decision by the country’s central bank not to cut interest rates despite lowering its economic growth outlook.
The Taiwan dollar and Thai baht each rose more than 0.6 percent, while the Indian rupee was 0.4 percent higher.
‘No reason to raise rates’
“What you’re seeing in the movement right now is an unwind of the bullish-dollar story,” Douglas Borthwick, head of foreign-exchange at New York brokerage Chapdelaine & Co, told Bloomberg News.
“The Fed has no reason to raise rates when you’re getting the data that we’ve been getting lately.”
Emerging market currencies have suffered heavy selling over the past year as the Fed was expected to lift rates, with dealers shifting into the United States looking for higher and safer returns.
The greenback was also under pressure against its major peers. In New York Wednesday it fell to 118.88 yen while the euro hit $1.1469, compared with 119.68 yen and $1.1385 in Asia earlier in the day.
And on Thursday it weakened further, buying 118.50 yen while the euro was at $1.1480.
Hopes for a continued low Fed rate provided support to regional stock markets, with Hong Kong —where monetary policy is tied to US policy—climbed 2.00 percent.
The biggest gainers in the city were casino giants, which rallied after Galaxy Entertainment announced better-than-expected earnings for the July-September quarter.
The firm surged 11.28 percent and Sands China soared 10.25 percent while Wynn Macau was up 7.4 percent.
Gaming firms have enjoyed a recent rally on hopes for improving revenues after a slump over the past year caused by China’s economic woes and a Beijing crackdown on graft.
Bargain buying also helped regional equities rally following broad losses on Tuesday and Wednesday after weak Chinese trade and inflation data reignited worries about the world’s number two economy.