Dol­lar rises in Asian trade


Asia-Pa­cific cur­ren­cies came un­der pres­sure on Tues­day af­ter China un­ex­pect­edly de­val­ued its yuan cur­rency in the face of weak­en­ing growth, driv­ing the dol­lar higher.

China's cen­tral bank an­nounced a near two per­cent drop in the value of its yuan against the US dol­lar, the big­gest fall since the cur­rency was un­pegged from the green­back in 2005. The Peo­ple's Bank of China (PBoC) set its daily ref­er­ence rate for the yuan at 6.2298 to $1, com­pared with 6.1162 yuan the pre­vi­ous day, ef­fec­tively 1.86 per­cent lower.

The sur­prise move sent rip­ples through Asia's cur­rency mar­kets, send­ing the Aus­tralian dol­lar -- of­ten seen as a proxy for the yuan -- tum­bling 0.90 per­cent to 73.47 US cents. The US dol­lar also gained against the South Korean won and In­dian rupee, and traded at 124.89 yen, up from 124.72 in New York.

The Chi­nese cen­tral bank's an­nounce­ment "looks to be a move to a more open mar­ket pol­icy," Stephen Innes, a se­nior trader at OANDA, told Bloomberg News. "Traders are look­ing for US dol­lar strength across the Asia re­gion and pres­sure on all lo­cal cur­ren­cies."

The euro dipped af­ter news that Greece has reached an agree­ment with its cred­i­tors on fis­cal tar­gets, leav­ing it on course for a bailout deal to avert an Au­gust 20 de­fault. The sin­gle cur­rency changed hands at $1.0970 and 136.91 yen against $1.1019 and 137.31 yen.

The dol­lar fell overnight in New York against the euro as US Fed­eral Re­serve of­fi­cials gave fresh clues about the tim­ing of the cen­tral bank's rate hike. Af­ter last Fri­day's solid US jobs re­port for July, many an­a­lysts saw sup­port for the Fed to raise its zero-level bench­mark fed­eral funds rate in Septem­ber. But Fed Vice Chair­man Stan­ley Fis­cher tem­pered ex­pec­ta­tions on Mon­day when he said low in­fla­tion re­mains a con­cern for the world's big­gest econ­omy.

Else­where, At­lanta Fed Pres­i­dent Dennis Lock­hart ap­peared to raise the prospect for a hike sooner rather than later. "We are get­ting closer and closer to what feels like a healed state of the econ­omy," Lock­hart said in pre­pared re­marks to the At­lanta Press Club. "I think the point of liftoff is close," he said.

In other trad­ing, the dol­lar rose to Sg$1.3999 from Sg$1.3847 on Mon­day, to Tw$32.11 from Tw$31.64, to 64.16 In­dian ru­pees from 63.76 ru­pees, to 13,591 In­done­sian ru­piah from 13,540.50 ru­piah, and to 35.35 Thai baht from 35.12 baht. The dol­lar also gained to 45.95 Philip­pine pe­sos from 45.73 pe­sos, and to 1,178.94 South Korean won from 1,163.13 won. The Chi­nese yuan fetched 19.75 yen against 20.01 yen.

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