Emerging currencies rally against dollar on stocks advance

Tokyo - High-yielding emerging currencies rallied against the dollar on Thursday as sentiment improved following broad advances across regional stock markets and a jump in oil prices.

The Malaysian ringgit and the South Korean won were among the beneficiaries of the rebound in sentiment, although analysts warned that dealers remained on edge after the volatile start of trading this year.

"Markets are focused on risk aversion from global stock plunges and falling oil prices," Naoto Ono, an analyst at margin-trading service provider Ueda Harlow, wrote in a client note.

The dollar halted its fall against the yen after briefly touching a one-year low of ¥115.98 on Wednesday. The US unit rose to ¥117.33 from ¥116.92 on Wednesday in New York.

The euro traded down against the dollar ahead of the European Central Bank's first policy-setting meeting of the year, which is slated to start later on Thursday in Frankfurt. The ECB is widely expected to leave its easy-money policy unchanged.

The single currency fell to $1.0879 from $1.0890 on Wednesday in US trade, while rising to ¥127.64 from ¥127.33.

Tokyo, Hong Kong and Sydney led gains in Asia as investors picked up cheap assets following Wednesday's bloodbath, although fears of further volatility hung over their heads.

US markets had provided a ray of hope, having slashed early losses with late bargain-buying, analysts said.

"The most important question for markets is whether last night's huge trading ranges and sharp turnaround represent capitulation or the beginning of a much deeper problem," Michael McCarthy, Sydney-based chief market strategist at CMC Markets, wrote in an email to clients.

"The next 24 hours are crucial to the near- and medium-term outlook for markets," McCarthy added.

With most Asia equities markets pushing higher, dealers sought out riskier, higher-yielding, currencies in favour of the dollar.
 
The ringgit gained 0.52%, while the won tacked on 0.37%, and Indonesia's rupiah was up 0.55%.

Thailand's baht was flat, however, while the Singapore and Taiwan dollar edged down 0.1%.