Dollar slips, Asian stocks gain as Fed holds rates

The dollar came under fresh pressure in Asia yesterday after the Federal Reserve decided against lifting interest rates but the prospect of cheap cash for longer sparked another rally in regional equity markets.At the end of one of its most anticipated meetings for some time, the central bank’s policymakers said the economy continued to improve and the argument for a rise was strengthening but more evidence of sustained progress was needed.However, while they lowered their growth forecast for this year, the policy committee said the rebound would continue through the second half, and suggested borrowing costs could rise before the end of the year.The decision to stick to the easy money policy for the time being came hours after the Bank of Japan overhauled its own stimulus programme to target inflation and held off cutting interest rates further into negative territory.Wednesday’s announcements helped soothe recent investor concerns that the age of cheap cash – which has supported markets for years – could be coming to an end, fuelling talk of an equity correction.“With both the BoJ and the US Fed doing nothing to upset the apple cart, the markets got what they wanted.And after selling off, have now bounced and look good technically,” Chris Conway, head of research at Australian Stock Report, said.Traders sold off the dollar as they looked for currencies with better, if riskier, returns.The South Korean won soared 1.6% against the greenback while the Indonesian rupiah climbed 0.3% and the Australian dollar rallied 0.7%.Malaysia’s ringgit jumped 0.8% while the Singapore dollar put on 0.6%.The greenback rose against the yen, having fallen earlier in the day, buying 100.70 yen.The euro and pound extended gains.Asian equity markets built on the previous day’s Japan-fuelled strong performance. Hong Kong added 0.4% by close, with traders in the city especially cheered as its monetary policy is linked to that of the United States.Shanghai added 0.5% by the close, Sydney rose 0.7% and Wellington put on 0.4%.Manila, Bangkok and Jakarta also saw strong gains.Tokyo was closed for a public holiday.Seoul surged 0.7%, with shares of South Korea’s struggling Hanjin Shipping rebounded strongly yesterday on news it will receive fresh funds of almost $100mn, after its collapse caused global turmoil on the high seas.The shares in the world’s seventh largest shipping company jumped some 30% after Korean Air, its largest stakeholder, late Wednesday approved an emergency loan of 60bn won ($54mn) to Hanjin Shipping. The board of Korean Air Lines approved a 60bn won (US$54mn) loan late Wednesday – part of a 100bn won emergency fund earlier pledged by the Hanjin Group, the parent of Hanjin Shipping and Korean Air.Korean Air end up 5.8%.