Asian Currencies Increased as Global Stocks and Chinese Shares Rally Boosts Sentiment

Sharp rebounds in the global equity markets and in Chinese shares Wednesday boosted risk sentiments, raising the currencies in emerging Asian currencies.

According to a report by Reuters, the Won increased as Seoul shares rallied. The increase in the currency is also due to the speculation that it has completed the dollar buying linked to the sale of Tesco for $6.1 billion.

According to Bloomberg, the Malaysian Ringgit and the Indonesian Rupiah have increased from 17-year lows due to the rebound in global equities, which prompted demands for Asian currencies.

Meanwhile, The Wall Street Journal reported that US stocks rallied Tuesday, after concerns of Chinese economic slowdown were quelled due to a rebound in the shares of the world's second largest economy.

Chinese shares are finally recovering. Meanwhile central bank Governor Zhou Xiaochuan said that the disaster in the Chinese stocks is almost over. These are the two major facts that boosted sentiments, reducing the appetite for the safety of dollars.

The dollar was softer overnight, and the Chinese market is firmer, which helps the upward turn of events, said a Commonwealth Bank of Australia currency strategist Andy Ji.

South Korea's won went up from a five-year low. The Thai Baht advanced from a six-year low. Meanwhile, the Bloomberg Dollar Spot Index went down 0.4 percent overnight. Also, the MSCI Asia-Pacific Index of shares increased 3.2 percent. This could be its biggest gain since 2011.

Malayan Banking Bhd. Singapore-based senior currency analyst Christopher Wong said, "Asian currencies including the Ringgit are tracking better risk sentiment and higher Brent overnight." However, he added, Volatility is still high in the Ringgit.

Samsung Futures' Seoul research head Jeong My-young said, "Today's rebounds in Asian currencies and stocks may be meaningful as they come after deep turmoil."

Chinese shares are increasing more than one percent due to the confidence that Beijing would take additional steps to make sure a hard landing for the economy won't happen.