Asian currencies cede ground

The Korean won fell to its lowest in a month on Thursday, undermined by foreign portfolio outflows and the fear of dollar-buying intervention, while other Asian currencies also ceded ground ahead of US inflation data.
The won fell to 1,163 per dollar, slipping 10 won against the dollar in a day. Traders said the decline was driven by a fear that South Korea's strength in exports would be eroded by the rise in oil prices back to near $41 a barrel and the outflow of foreign investment.
Also, the likelihood Korea's parliament would soon approve a plan to issue 11 trillion won ($9.5 billion) worth of treasury bonds to stabilise the currency markets unnerved traders.
Korean stocks fell slightly on Thursday, extending Thursday's two percent slide.
The yen fell further to hit 109.50 as the US dollar was underpinned by this week's unexpectedly strong exports data and expectations for favourable inflation reports later on Thursday and on Friday.
The Taiwan dollar hit 33.95, a low points last seen in early January. And the Sing dollar dropped to 1.7080 per dollar, weakening from 1.7025 on Wednesday.
Analysts said the dollar's rebound this week had led to markets reassessing their bullish views on Asia.
In particular, the waning expectations of a revaluation of the Chinese yuan and sluggishness in foreign equity inflows worried analysts.
"We retain a medium-term positive view on Asian currencies against the US dollar. However, in the short term the market may focus on the adverse impact of higher oil prices on Asian currencies," economists at UBS said in a note. Another blow for Asia's terms of trade could come from falling semiconductor prices, UBS said, referring to the drop in the Philadelphia Stock Exchange's semiconductor index to its lowest since September 2003.
The Philippine peso ended the day near 56 per dollar. Economists at Bank of America said the scope for the peso to rise had shrunk since the markets would now focus on the economic challenges facing the new administration.
Economists at UBS also said the yen could outperform the region when the dollar began sliding again, given Japan's economy was relatively stronger than the rest of the region.
"We continue to expect the yen to relatively outperform the rest of Asia, not only because it is more liquid, but also due to Japan's stronger position in the economic and profits cycle relative to most Asia ex-Japan economies."
The Taiwan dollar was quoted at 3.22 yen compared with 3.41 about two months ago.