Dollar Weakness Boosts Asian Currencies to Record High

Asian currencies reached new heights as the US dollar weakened to a two-month low. The softer greenback led investors to reduce their expectations for a near-term Federal Reserve rate hike, which in turn lifted MSCI's emerging markets currency index by 0.3% to a record high.

Taiwan's dollar jumped 0.7%, while South Korea's won and Japan's yen both edged up. Thailand's baht rose 0.3%. The Thai SET index outperformed after the government raised its full-year growth forecast following a 1.9% second-quarter expansion.

The weakening US dollar makes it easier for companies and governments in Asia-Pacific to raise money by reducing the 'currency-risk premium' that investors demand. This can tighten credit spreads, making borrowing cheaper for these economies.