The South Korean won led gainers in the Asian currency markets for a second consecutive session on Tuesday, amid hopes that the first phase of a trade deal between the United States and China is in the making.
US President Donald Trump said on Monday he expected to sign a significant part of the trade deal with China ahead of schedule, but did not elaborate on the timing.
Leaders of the world’s two biggest economies are working to agree on the text for a “Phase 1” trade agreement announced by Trump on Oct. 11. Trump has said he hopes to sign the deal with China’s President Xi Jinping next month at a summit in Chile.
The renewed optimism around a partial resolution to the festering Sino-US trade row reduced demand for safe haven assets including the greenback.
The dollar index against a basket of six major currencies was more or less flat after slipping off one-week highs on Monday.
Also, investors remain focused on the US Federal Reserve meeting on Wednesday, when policymakers are expected to cut interest rates by 25 basis points for the third time this year, a move which is already priced in.
“The ongoing positive sentiment around the Sino-US phase-1 deal is rubbing off on Asian currencies,” said Khoon Goh, head of Asia research at ANZ Banking Group (Singapore).
“The Korean won tends to do well on risk-on periods. Also, during month-end period, exporters typically sell off dollars as they convert export proceeds back into won and that’s helping the currency’s strength.”
The won gained as much as 0.5 percent to its strongest in nearly four months, after adding up to 0.4 percent in the previous session.
The Indian rupee resumed trading on a strong note after Monday’s holiday, gaining as much as 0.3 percent to touch its firmest level in nearly a month.
The Chinese yuan, the Philippine peso and the Taiwanese dollar gained as much as 0.2 percent each, while the Indonesian rupiah and the Malaysian ringgit firmed slightly.
The Thai baht trimmed marginal losses to trade more or less unchanged.
On Tuesday, Thailand’s industry ministry said the country’s manufacturing production index in September fell a worse-than-expected 4.7 percent from a year earlier, dragged down by lower production of cars, petroleum and rubber. – Reuters