(Reuters) - Most Emerging Asian currencies strengthened on Friday as signs of progress in top-level negotiations between China and the United States spurred hopes that the two sides were moving towards a limited deal.
U.S. President Donald Trump on Thursday described the talks as “very, very good,” while a White House official said they were “probably better than expected”, comforting markets that had been embroiled in uncertainty in the lead up to the meeting.
“Investors are ready to celebrate any form of a U.S.-China trade deal, even a limited one, after having endured trade-related turmoil since May,” Han Tan, market analyst at FXTM, said in a note.
The improvement in sentiment pushed the trade-sensitive South Korean won KRW=KFTC 0.7% higher to a more than three-week peak.
The won is the worst performing Asian currency this year, weighed down by the Sino-U.S. trade conflict and South Korea’s trade tussle with Japan.
“Investors are cognizant that a trade pact that marks a pause in tariff hikes without rolling back any of the tariffs imposed since last year would not solve all of the global economy’s existing problems,” Tan said.
President Trump has said that U.S. tariffs on $250 billion worth of Chinese goods would rise to 30% from 25% on Oct. 15, as planned, if no progress is made in the ongoing negotiations.
The Philippine peso PHP= reversed from gains earlier in the session to trade slightly lower.
The World Bank on Thursday cut its forecasts for economic growth in the Philippines for 2019 and the next two years, citing external problems, including the U.S.-China trade war, and a slowdown in public investments.
Financial markets in Taiwan were closed for a holiday.
The Malaysian ringgit MYR= ticked up ahead of the country's budget due later in the day.
In August, the country’s finance minister had said that Malaysia may consider an expansionary budget for 2020 to mitigate the effects of the trade war between the United States and China.
“It’s going to be difficult for the economy to continue to outperform as global headwinds are getting stronger and this demands greater policy support,” ING had said in a note last week.
“We don’t see them backtracking on the fiscal goals, though the planned 3% of GDP deficit for 2020 sounds optimistic for now.”
Data released earlier in the day showed the country’s August factory output rose 1.9%, slightly below the 2% expansion forecast in a Reuters poll.
Reporting by Shreya Mariam Job in Bengaluru; Editing by Aditya Soni