* Fed sounds less hawkish than many had anticipated
* Taiwan dollar hits the highest since May 2015
* Drop in U.S. yields bodes well for carry trade -analysts
* Indian rupee hits highest since October 2015
(Adds detail, updates prices)
By Patturaja Murugaboopathy
March 16 Asian currencies rose on Thursday after
the U.S. Federal Reserve sounded less hawkish than many had
anticipated on the pace of further interest rate increases this
year, in a relief for risk assets worldwide.
Investors holding long positions on Asian currencies were
also relieved after Dutch centre-right Prime Minister Mark Rutte
scored a resounding victory over anti-Islam and anti-EU Geert
Wilders in an election on Wednesday.
"It is all but an open invitation to buy EM, equities,
commodities as the Fed has green-lighted risk for the
foreseeable future," said Stephen Innes, senior trader at OANDA.
The Taiwan dollar touched its highest since late
May 2015, at 30.564 per U.S. dollar, while the South Korean won
climbed more than 1 percent.
The Indian rupee rose nearly half a percent on
strong equity markets and hit its highest since October 2015.
India's broader NSE share index hit a record high on
China's yuan too strengthened after the central
bank raised short-term interest rates for the third time in as
Analysts said with the Fed rate hike now out of the radar,
investor attention will move to fundamentals of Asian economies
which are showing signs of revival.
"This mild Fed stance will likely dispel the fear that a
stronger dollar or higher U.S. rates pose a headwind to EM,"
Citi analysts wrote in a note.
"Instead, recent indications of a broadening and
strengthening of the EM recovery, especially in Asia's more
manufacturing-export economies, is likely to now become the
principal driver of investment decisions."
The 10-year U.S. Treasury yield fell after the
Fed meeting, slipping to as low as 2.486 percent on Thursday.
Earlier this week, it rose to as high as 2.629 percent,
near a two-year high of 2.641 percent set in mid-December.
Some analysts said the drop in U.S. bond yields was likely
to bolster demand for higher-yielding currencies in emerging
"We have been fairly constructive on Asian carry such as IDR
and INR. Our forecasts is for U.S. yields, especially the
10-year yields, to not move significantly higher," said Mitul
Kotecha, head of Asia macro strategy for Barclays in Singapore.
The risk adjusted returns, as measured by the Sharpe ratio
for the Indian rupee, the South Korean won and the Taiwan
dollar, have all been over 3 percent this year, according to
Thomson Reuters' calculations.
CURRENCIES VS U.S. DOLLAR
Change at 0702 GMT
Currency Latest bid Previous day Pct Move
Japan yen 113.230 113.35 +0.11
Sing dlr 1.404 1.4011 -0.17
Taiwan dlr 30.668 30.840 +0.56
Korean won 1132.000 1143.6 +1.02
Baht 35.023 35.054 +0.09
Peso 50.210 50.34 +0.26
Rupiah 13337.000 13360 +0.17
Rupee 65.370 65.69 +0.48
Ringgit 4.435 4.446 +0.25
Yuan 6.891 6.9135 +0.33
Change so far
Currency Latest bid End 2016 Pct Move
Japan yen 113.230 117.07 +3.39
Sing dlr 1.404 1.4490 +3.24
Taiwan dlr 30.668 32.279 +5.25
Korean won 1132.000 1207.70 +6.69
Baht 35.023 35.80 +2.22
Peso 50.210 49.72 -0.98
Rupiah 13337.000 13470 +1.00
Rupee 65.370 67.92 +3.90
Ringgit 4.435 4.4845 +1.12
Yuan 6.891 6.9467 +0.81
(Reporting by Patturaja Murugaboopathy; Additional reporting
by Gaurav Dogra in Bengaluru and Masayuki Kitano in Singapore;
Editing by Biju Dwarakanath)