The Indonesian rupiah laboured under persistent political worries on Tuesday but other Asian currencies rallied as markets resumed selling the dollar against the yen and euro. Trading in the majors as well as in Asian currencies was listless heading into the year end, with markets driven mainly by position adjustments in the absence of major data releases. The yen hovered around 103.80/90, about half a percent higher than levels late on Monday in Asia. The Singapore dollar, Korean won, Taiwan dollar and Thai baht all gained about a quarter of a percent each.
The Korean won spent the day around 1,055 a dollar. The Taiwan dollar moved up to 32.24, last week's highs, overcoming some of Monday's weakness caused by China's disclosure of plans to introduce a law against the island's secession from the mainland. It later pared some gains.
The Singapore dollar stayed on the weaker side of 1.64 per dollar, struggling to make headway amid talk that the Monetary Authority of Singapore had been checking prices in the market.
Nizam Idris, a strategist with IDEAglobal.com, said the Singapore dollar was about 0.1 percent on the weaker side of the undisclosed trade-weighed band within which the Monetary Authority of Singapore guides the currency.
"It is consolidating in a range of 0.2 percent around the mid-point of the band, and that will continue until the new year," Idris said.
The MAS has maintained a monetary tightening bias since April, which it has said will occur through a gradual appreciation of the mid-point of the band.
IDEAglobal's model assumes a 3 percent annual appreciation of that mid-point. Idris said the Sing dollar would probably move in line with that forecast until economic data improved and markets priced in an even stronger currency.
"The underlying Chinese yuan and Malaysian ringgit speculation will ensure that the Sing dollar is not weaker than the trend appreciation rate, yet stronger macro data is needed for markets to price in a stronger appreciation than the trend rate," Idris said.
Elsewhere, the Thai baht met with resistance near the 39 per dollar level that brought it closer to an early December high near 38.90. It has been boosted by foreign portfolio inflows and a stock market that has been rising in the past 10 days.
The Indonesian rupiah, the regional laggard, which has been dogged by commercial outflows and political worries, stayed weak around 9,315 to a dollar.
Some analysts are worried that Indonesian Vice-President Jusuf Kalla's weekend victory in the contest to lead Golkar, the biggest opposition party, could prove a threat to President Susilo Bambang Yudhoyono in the event of disagreements over policy in Indonesia's fragmented cabinet.
Traders said the lots being traded were small.
"Trading is now very opportunistic. There is no appetite for big positions," said DBS Bank strategist Philip Wee.
Wee said markets were also puzzled by some recent data, which made it difficult to forecast the broad dollar trend.
The US Treasury last week reported that foreign investment in US assets fell to $48.1 billion in October, the lowest in a year and short of the $55.5 billion US current account deficit for the month. That, Wee said, was dollar-bearish.
Friday's data from the US Commodity Futures Commission showed markets were short euros in the week to December 14, the first net short position in euros since November 2001. Analysts said there had been a huge reversal in euro positions that week, from heavy longs to short.
That data indicated the euro's resilience and reflected support for the currency, but it also showed that markets had booked profits on their dollar short positions and that further dollar downside could be limited.
DBS's Wee said talk in the US Treasuries market that the Federal Reserve might accelerate its monetary tightening was also a factor that could keep the dollar choppy.
Shorter-term Treasuries fell on Monday after Richmond Fed President Jeffrey Lacker said faster rate increases could be needed if productivity slows.
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