The Malaysian ringgit led a rally in emerging market currencies Thursday as a surge in oil prices injected traders with confidence while minutes from the Federal Reserve suggested it will not hike interest rates for some time.
Crude, which last week flirted with 13-year lows, extended a surge that began Friday as dealers grow hopeful of an easing to the overproduction and supply glut that has hammered the commodity for a year and a half.
The surge in the commodity came after Iranian oil minister Bijan Zanganeh welcomed the pact between top two producers Russia and Saudi Arabia to pursue a coordinated strategy to limit output.
While he stopped short of committing Iran to any production curbs, his comments were taken as a step in the right direction in trying to bring an end to a crisis that has seen prices of oil fall more than 70 percent since mid-March highs.
The oil-linked ringgit jumped 1.5 percent against the greenback, while the Australian dollar jumped 0.4 percent, Indonesia's rupiah added 0.3 percent and the Thai baht put on 0.3 percent.
The Taiwan dollar and Philippine peso also marked up healthy increases.
The greenback was also weighed by minutes from the Fed's January policy meeting indicating it is unlikely to press on with further interest rate cuts any time soon.
The minutes showed policymakers were worried about the impact of recent world market gyrations on the US economy and that they would closely follow events when deciding on whether to hike rates again.
‘The market took the... minutes to mean that the Fed is going to revise down expectations for rate hikes this year,’ Irene Cheung, a Singapore-based foreign-exchange strategist at Australia & New Zealand Banking Group, told Bloomberg News.
The greenback was at 114.02 yen from 114.05 yen Wednesday in New York, while the euro edged up to $1.1139 from $1.1126. The single currency was also at 126.99 yen and 126.89 yen.
‘The Fed minutes show that it does look like they're gearing up for a slower rate hike path, which is good’ for risk assets, Nader Naeimi, Sydney-based head of dynamic markets at AMP Capital Investors, told Bloomberg.
‘I think this rally has further to go, with the conditions set for the rebound to continue for a little while.’
