Asian Currencies Soar as Weakening US Dollar Boosts Emerging Markets
Asian currencies have reached fresh highs as the US dollar softened, driving MSCI's emerging-market currency gauge to a record. The Taiwan dollar led the charge, climbing 0.7% to its strongest level in more than six weeks. According to HSBC, the recovery may continue as dividend-related money leaves the country.
The weakening greenback is the main catalyst for this trend, which is typically seen when investors trim expectations for another Federal Reserve rate hike soon. This reduces pressure on emerging-market currencies and encourages risk-taking in stocks. The MSCI emerging Asia equity index rose 0.7%, while Taiwan shares have gained 58.3% this year.
In Thailand, the SET index jumped over 1% after stronger-than-expected second-quarter growth and a revised full-year forecast. This helped lift the baht by 0.3%. Traders are now watching central banks like Bank Indonesia, which is expected to keep rates at 5.75%, supporting the rupiah.