The Philippine peso gained nearly half a percent and the Indonesian rupiah also rose on Tuesday as traders picked high-yielding currencies against a broadly weak US dollar. Yet, even though investors now seem to think there is little chance of US interest rates going up again, only a few Asian currencies benefited from that bearish view on the dollar.
The low-yielding Taiwan dollar was weak, and the Japanese yen shed half a percent to levels around 118.50 per dollar. The Australian dollar was one of the gainers. It hit a decade high of $0.8181 overnight, helped by the rising odds of domestic interest rates being raised. Strength in the Aussie also boosted the New Zealand dollar.
In emerging Asia, the won rose slightly to near 936 per dollar and the Thai baht also clawed 0.05 percent higher to 34.95 per dollar. The peso rose to 48.17 from Monday's close of 48.34 per dollar and the rupiah hit a 10-day high of 9,085 per dollar.
"The dollar's weak against most everything else, especially high-yielding currencies like the Aussie and New Zealand dollar," said BNP Paribas strategist Thio Chin Loo, while noting that the yen was an exception. Asian data showing rising currency reserves and trade data would underpin the regionals, she said. "Also, US-China trade tensions are adding to Asian currency appreciation play," Thio said.
Many of the Asian currencies rose on Monday after the United States imposed anti-subsidy duties on imports of glossy paper from China, drawing protests from Chinese companies and raising fears of a trade spat. Strategists seemed to be veering to the view that the dollar was set for weaker days.
"The broad dollar is indeed weakening. Economic conditions in the US continue to deteriorate and rate policies are not in favour of the US," said Lehman Brothers strategist Craig Chan.
US economic data on Monday did little to clear the market's foggy perceptions of future Federal Reserve policy. US manufacturing data showed growth slowing in March but a rise in prices paid in the manufacturing sector. Meanwhile, St. Louis Fed President William Poole said he would lean towards a further rate rise if inflation failed to come down.
"Especially now, with the recent housing and rate uncertainties in the US, there's a very good chance the US dollar will be more negatively viewed by the market," said Jason Sie, head of regional currency trading at BNP Paribas.
Even so, Sie said traders were being highly selective, which was why high-yielders such as the Indonesian rupiah was still not that much in demand. One popular trade was to sell the Singapore dollar to buy the high-yielding Aussie and kiwi, he said.
One Aussie was yielding 1.24 Singapore dollars on Tuesday, having risen from about 1.22 late last week. Against the kiwi, the Singapore dollar weakened to 1.1 per NZ dollar, its lowest since February 2006.
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