Asia’s markets are bouncing back from a selloff that sent some regional currencies to their lowest level since the Asian Financial Crisis in the late 1990s.
Concerns that the U.S. Federal Reserve would raise interest rates for the first time in nine years spurred a massive outflow of funds from emerging markets, including Asia’s. But the Fed meeting on September 16-17 surprised markets by leaving rates unchanged and many analysts moved their forecasts for the next hike back into next year.
That’s helped to push hard-hit currencies — such as Indonesia’s rupiah and Malaysia’s ringgit, which fell to their weakest levels since around 1998, during the Asian Financial Crisis — up to their highest levels in almost three months.
Against the greenback, the Malaysia’s ringgit has risen around 7.4 percent, Indonesia’s rupiah has tacked on around 8.7 percent since the beginning of this month and South Korea’s won has added 2.8 percent since the beginning of October.
That does, however, follow an around 18 percent drop in the rupiah and an around 28 percent decline in the ringgit over the January-to-September period. Malaysia and Indonesia are oil exporters so their two currencies have been pressured by the long downturn in oil prices.
Gains got another fillip after the release Thursday of the minutes of last month’s Fed meeting.