TOKYO — Higher-yielding emerging market currencies rose against the U.S. dollar in Asia on Friday, after a jump in crude prices and hints the ECB could unleash more stimulus helped cheer traders. The South Korean won and the Malaysian ringgit were among top gainers, after taking a battering over concerns of slowing global economic growth, the impact of a U.S. rate rise and a slump in oil to below US$30 a barrel.
European Central Bank (ECB) chief Mario Draghi helped contain the pessimism clouding markets on Thursday when he said the eurozone central bank would “review and possibly reconsider” its monetary policy in March. “There are no limits how far we are willing to deploy our policy instruments,” he told a news conference. The euro dropped after the news, fetching US$1.0843 and 127.73 yen in Asian trade from US$1.0878 and 127.99 yen Thursday in New York.
“Higher oil prices and general risk-on after the ECB president sweet talked the markets with convincing rhetoric on additional stimulus boosted sentiment,” Vishnu Varathan, a Singapore-based economist at Mizuho Bank, told Bloomberg News. The ringgit surged, rising 0.96 percent, after crude prices jumped off 12-year lows and pushed back toward the key US$30 a barrel level in New York. The currency is heavily influenced by the price of oil as Malaysia is Asia’s only major net petroleum exporter. Among other riskier, higher-yielding emerging units, the won advanced 0.18 percent, while the Indonesian rupiah was up 0.27 percent. The Thai baht also gained. Traders also moved out of the safe-haven yen, pushing the U.S. dollar higher against the Japanese currency to 117.82 yen, from 117.66 yen in U.S. trade. Dealers are now keeping tabs on the Bank of Japan’s (BOJ) first policy meeting of the year, which is slated for Thursday and Friday next week, amid speculation it too could announce fresh monetary stimulus. On Friday, the Nikkei business daily cited a senior BOJ official saying Japan’s central bank is considering boosting its bond-buying program to counter the negative impact of slumping oil prices on its efforts to beat deflation. But Yasunari Ueno, chief market economist at Mizuho Securities, said the impact of any fresh stimulus could be tempered by the difficult market conditions.
“The ideal scenario for the BOJ to act would be once the market has regained some calm and begun to edge back towards risk-on,” Ueno wrote in a client note. “Central bank action at that point might give greater impetus to the restoration of confidence.”