(Bloomberg) -- Emerging-market currencies rose on Monday, led by a surging South Korean won, as investors took heart from the Federal Reserve's readiness to cut interest rates.
The won jumped as much as 1.9% while the Thai baht strengthened and the Malaysian ringgit each advanced at least 0.5% after Fed Chairman Jerome Powell said on Friday that the central bank would “act as appropriate” to combat the economic threat of the coronavirus.
Powell Ready to Cut Rates Despite Doubt Fed Can Offset Virus
Gains in the won also reflected the unexpected decision by the Bank of Korea on Thursday to refrain from a knee-jerk rate cut. The won appreciated to 1191.70 per dollar Monday in its biggest intraday increase since June 2016.
The nation's sovereign bonds also rallied, sending the three-year yield to a record low 1.05%.
“The Fed's comments are in effect soothing markets for now,” said So Jaeyong, economist at Shinhan Bank in Seoul. The won may strengthen to 1,190 per dollar this week, said So.
The won's move comes even as the number of virus cases in South Korea rose past 4,200, while North Korea fired two unidentified projectiles in its first missile test of the year.
To contact the reporter on this story: Hooyeon Kim in Seoul at hkim592@bloomberg.net
To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net, Neha D'silva
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