Emerging Currencies Cling to Three-Day Rally Before BOJ Meeting

Emerging-market currencies clung to a three-day rally and stocks were steady as investors waited for the Bank of Japan’s much-anticipated policy review.

Singapore’s dollar and South Africa’s rand led gains, while the Taiwanese currency and South Korea’s won edged up slightly before the BOJ announcement at around midday in Tokyo where the authority is expected to expand its already unprecedented support program. Asian stocks markets were mixed with Chinese and Taiwanese gauges falling and most Southeast Asian indexes rising.

The BOJ decision is turning into one of the most closely watched economic events of the year, with Governor Haruhiko Kuroda facing intense expectations to deliver more monetary stimulus. Some of that money will find its way into emerging-market assets and help to extend a rally that’s been powered by the prospect of more stimulus after Britain’s vote to leave the European Union.

“The markets are already pricing in some expectations of easing,” said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group Ltd. in Singapore. If easing expectations are exceeded the won and the Taiwanese and Singaporean dollars will probably weaken in tandem with the yen, he said.