Oct 10): Most Asian currencies turned firmer on Tuesday with the Korean won coming back well-refreshed from a week’s holiday and China’s resurgent yuan bolstering its regional peers.
The Korean won rose to levels unseen in about two weeks in its first day of trade in the month, while Seoul’s Kospi Index was on a tear, attracting large flows into the currency.
Geopolitical tensions resurfaced over rumours that North Korea may be planning a provocative missile test but countervailing views that further escalation was an unlikely added appeal to the currency.
“When they start threatening to fire off rockets at each other, we know it’s really not going to come to fruition. But investors are gradually sidestepping that risk aversion that came to the market,” said Stephen Innes, Head of Trading APAC at FX broker OANDA.
The regional currencies were buoyed up by China’s yuan heading for its best day in more than a month.
The currency gained over half a percent against the greenback as the central bank set stronger-than-expected official guidance, suggesting authorities are stabilising the currency before the all-important national leadership congress next week.
The Thai baht edged up for the fourth session out of five and the Malaysian ringgit rose marginally.
“Investors are looking at the fact that the Thai baht and the Malaysian ringgit are under positioned right now after the recent sell-off and they are providing opportunities to pick up,” said Oanda’s Innes.
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