EMERGING MARKETS-Taiwan dollar shrugs off potential manipulation tag; other Asian FX gain
Shruti Sonal, March 2021
March 11 (Reuters) – The Taiwan dollar strengthened on Thursday even as the country’s central bank warned of a potential U.S. scrutiny of its monetary policy, while other emerging Asian currencies gained as easing inflation fears and falling Treasury yields hurt the greenback.
The Taiwan dollar, among the best performing currencies in the region this year, added 0.6%. Taiwan’s central bank said it bought a net $39.1 billion to intervene in the foreign exchange market, as it stepped up efforts in November and December to “avoid serious disorder”, possibly putting the trade-dependent island in Washington’s crosshairs to be labelled a manipulator.
Most other currencies also gained as the U.S. dollar languished near one-week lows. The South Korean won climbed 0.6%, while the Thai baht added 0.4%.
However, the long-term outlook for the region’s currencies remained less than rosy.
A Reuters poll showed investors cut long bets sharply on the Chinese yuan, while turning short on most other Asian currencies, as improving prospects of economic growth in the United States and the recent rise in yields have bolstered the dollar.
Bets on the South Korean won, the Singapore dollar and the Malaysian ringgit all turned bearish for the first time since early last summer.
Most equities climbed higher, tracking gains on Wall Street overnight after benign consumer price data for February calmed inflation fears and Congress gave final approval to one of the largest economic stimulus measures in U.S. history.
The South Korean benchmark climbed over 2% after five consecutive sessions of declines, while Taiwan and Singapore added 1.6% and 0.9% respectively.
Thai shares hit their highest in nearly two months as consumer confidence increased for the first time in three months in February, bolstered by an easing coronavirus outbreak, government stimulus and the distribution of vaccines.
