The Singapore dollar, Korean won and Malaysian ringgit hit fresh 10-year highs on Friday after weak US data led to renewed selling of the dollar and spurred some Asian central banks to step into the market.
The dollar fell broadly after Thursday's soft durable goods orders, coming on top of the previous day's data showing existing home sales at a record low in September, which intensified expectations of another rate cut by the Federal Reserve next week.
US crude oil prices at $92 a barrel and the jump in gold prices to 28-year highs also hurt the dollar. The dollar hit a record low of $1.4377 against the euro. The Singapore dollar was capped at a 10-year high of 1.4523 per US dollar, after a rally of a quarter percent. It retreated in later deals to 1.4595, but analysts remained bullish.
"I would sell rallies on the US dollar whenever the MAS intervenes. Inflation is creeping higher, so the Sing dollar will eventually appreciate," said a trader. That seemed to be the predominant view.
BNP Paribas analyst Thio Chin Loo said she sees the Singapore dollar at 1.40 by the year-end. J.P. Morgan's strategists said Asian central banks were likely to intervene to rein in their currencies but would progressively have to buy dollars at lower levels since bad news from credit markets and views on US rates would weigh on the dollar.
Analysts said the Singapore dollar had outperformed some of its neighbours and was near the top end of the secret trade-weighted band in which the Monetary Authority of Singapore (MAS) manages the currency.
"Intervention seems very plausible to me," said Westpac Bank's Sean Callow, who felt that long positions in the Indian rupee and Philippine peso had better potential for returns. The ringgit hit 3.345 per dollar, rising past the 3.35 level for the first time since late 1997 and taking its gains in just 3 sessions to more than 1 percent.
Traders said the central bank had bought dollars through some banks, but the momentum of ringgit-buying was too strong. Suresh Kumar Ramanathan of CIMB Bank said the ringgit would see a sudden jump if the 3.345 level was breached, with the next resistance coming in only at 3.33 - a level seen in November 1997.
Earlier in the day, Malaysian Trade Minister Rafidah Aziz was quoted by media as telling businesses they should learn to cope with ringgit fluctuations even if it worked against them.
The Philippine central bank (BSP) was suspected of buying dollars to keep the peso from hitting the 44-per-dollar level. The currency stalled at a seven-year high of 44.02 per dollar, just a fraction higher than Thursday's 44.03 peak. "BSP is buying dollars heavily but the market flows are all on one side - selling," a trader in Manila said.
South Korea's central bank warned market participants it would take steps if the won rose excessively. The won stopped short of 909 per dollar, but hit 10-year highs.
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