ASEAN currencies continue to rally

Nov 22 (Reuters) – Asian currencies firmed on Wednesday on the back of a weakened U.S. dollar after Federal Reserve chair Janet stuck by her prediction that U.S. inflation would rebound but added she was “very uncertain” of it happening. “She mentioned quite specifically that inflation expectations could be drifting lower, which is something she has not spoken about before,” said Nizam Idris, head of strategy, fixed income and currencies at Macquarie Bank.

“Basically, she has cast some doubt over the Fed’s previous view that the low inflation that we see currently is transitory in nature.” Idris said.

“So, both those twists in her opinions in my view are dovish and therefore I think the dollar has weakened from those comments.”

The dollar index , which measures the greenback against a basket of six major currencies, fell from a one-week high of 94.165 overnight. Among Asian currencies, the Malaysian ringgit strengthened over 0.4 percent after central bank Governor Muhammad Ibrahim said the currency was “far from reflecting its fair value”, signalling a desire for the exchange rate to build on its recovery from a sharp selloff last year.

“BNM (Bank Negara Malaysia) would prefer a stronger ringgit to take the edge off rising prices given their latest forecast suggesting inflation wll be at the upper end of the forecast range,” Stephen Innes, head of trading APAC at Oanda, wrote in a note on Wednesday.

Malaysia’s annual inflation rate is likely to moderate to 4 percent for October from 4.3 percent in September, according to a Reuters poll

Via Reuters


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Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes