Asian currencies inch up on strong manufacturing activity

MOST Asian currencies crept higher yesterday as strong manufacturing activity across the regional economies spurred risk appetite, but dollar losses were contained as investors expect the Federal Reserve could possibly signal a June rate increase later in the day.

Factories across much of Asia got off to a solid start in the second quarter, buoyed by strong global demand, particularly for hi-tech gadgets, which are leading a strong rally in electronics.

The Indonesian rupiah appreciated 0.1% against the dollar after manufacturing activity improved for the second straight month in April to hit a 10-month high.

The Indian rupee strengthened for a second day after a business survey showed that Indian manufacturing activity expanded for a fourth consecutive month in April, helped by stronger growth in new orders.

“The manufacturing PMI prints from Asia was mostly upbeat and well in the expansion territory, suggesting that the manufacturing momentum still had room to extend in Q2,” OCBC Bank said in a note.

Among other currencies, the Taiwanese dollar was firmer for a second day, rising 0.1% to hit its highest since Sept. 2014.

Markets are also keeping a close eye on the Fed’s policy statement for hints on the US interest rate outlook.

The Fed is widely expected to keep interest rates unchanged at the end of its two-day policy meeting yesterday, but investors will look to see whether the central bank downplays the recent soft patch in the economy to leave the door open for a rate increase in June. – Reuters