SINGAPORE (Reuters): Currencies in emerging Asian markets jumped on Friday, with the ringgit, baht and rupiah touching multi-week highs after US President Donald Trump talked of a trade deal, rather than a trade war, with China.
The MSCI gauge of emerging market currencies rose 0.4% to its highest in seven weeks, while a gauge of emerging Asian equities was up 0.1%, easing from a 1% jump to a more-than-two-week high earlier in the day.
Trump told Fox News that his conversation with Chinese President Xi Jinping last week was friendly and he thought he could reach a trade deal with China.
Investors have been on edge since Trump threatened to impose major tariffs on China, but his latest comments hinted at a softer stance, triggering a rush to sell the dollar and lifting risk-sensitive assets in emerging markets.
The dollar index fell broadly, headed for its worst weekly fall in five months, following Trump's comments on China and his demands that the Federal Reserve cut interest rates, which is also a net positive for emerging markets.
Poon Panichpibool, a markets strategist at Krung Thai Bank, said he expects Asian currencies to strengthen further in the short term but cautioned that the tariff risk was not over. Wei Liang Chang, an FX and Credit strategist at DBS Bank, echoed the sentiment, saying, "We are not discounting the fact that tariffs could still be imposed... but perhaps at a more calibrated pace."
China's yuan surged to a 2-month high against the dollar, while stocks gained around 1.6%.
Malaysia's ringgit continued to surge, rising 1.4% to its highest since early November, while Indonesia's rupiah appreciated 0.7% to a two-week high.
The Philippine peso rose 0.5%, while the Thai baht advanced by 0.9% to its highest since early December.
Singapore's dollar strengthened 0.6% to its best level since mid-December as the city-state's central bank loosened its monetary policy for the first time in five years. In east Asia, the Bank of Japan raised interest rates to their highest since the 2008 global financial crisis.
Equities in emerging Asian markets were largely mixed. Stocks in Malaysia, Indonesia and the Philippines lost between 0.2% and 0.8%. Equities in Singapore were flat, while those in Thailand edged higher. - Reuters
