Asian central banks likely to step in to smooth FX fluctuations in wake of post-U.S. presidential election

Most Asian central banks are expected to step in to initiate a smooth foreign exchange movement in the wake of the aftermath of the United States 2016 presidential election, leading to an unexpected Trump victory. The dollar index has since November 9, surged near to 4 percent, against a basket of major trading currencies.

Most EM Asian currencies extended their losses during Thursday’s Asian session, led by the IDR and MYR, given high foreign holdings in local government bonds. The KRW declined modestly as well. Korea’s prosecutors on Thursday raided two conglomerates and government offices in the probe into influence-peddling scandal. The nation’s household debt reached an all-time high of KRW 1,295.8 trillion in Q3.

"We remain bearish on the KRW and expect USD/KRW to reach 1,200 ahead of December FOMC meeting," Scotiabank commented in its latest research report.

Further, the Bank of Korea (BoK) said Thursday that it will cut the number of MPC meetings to eight, starting 2017. Also, USD/INR rose to a record high of 68.865 on Thursday before retreating somewhat. Singapore’s Q3 GDP growth was revised upwards with a lift by manufacturing.

However, the downward pressure on the SGD will persist amid hovering external uncertainties. Thailand’s Deputy Prime Minister Prawit Wongsuwon said yesterday that the roadmap to the next election remains unchanged and nothing can delay it, although he seemed less than committed.

Meanwhile, the USD/INR currency pair rose fell 0.51 percent to 68.22 percent.