The Indonesian rupiah fell on Tuesday on selling by foreign banks and month-end dollar demand from local companies, while the Philippine peso turned higher after Moody's Investors Service' raised its outlook on the sovereign rating. The South Korean won outperformed on exporters' demand, and the Taiwan dollar gained on foreign inflows after the ruling party proposed a stock gains tax plan that favours investors.
The rupiah, which has suffered from uncertainty over local policies such as ownership in banks and inflation control, was supported by central bank intervention, dealers said. Still, that was not enough to prevent a 2.5 percent spike in the dollar/rupiah's spot indicative price to 9,550. Dealers also said real market prices were higher, with trades seen at 9,600. The rupiah's one-month non-deliverable forwards (NDFs) rose as much as 1.2 percent to 9,725, with the curve for one-month and one-year NDFs steepening, suggesting that fund managers are still eager to increase hedge ratios.
Bank Indonesia was spotted offering dollars in the spot market at 9,450 and 9,500, dealers said. Central bank officials could not be immediately reached for comment. Before the market closed, the central bank announced that it was issuing dollar term deposits to banks, and the governor told reporters he was optimistic the move will help strengthen the rupiah. But currency players shrugged off the plan.
"We believe BI's action will provide an incentive for banks to place their offshore USD liquidity onshore. However, it is unclear how this will improve the liquidity situation in the onshore market," Standard Chartered said in a note. StanChart said bond investors should use a rebound in the rupiah as chances to raise their foreign exchange hedge ratio.
Dollar/Philippine peso initially rose on concerns over Spain's banking system, but it turned lower after Moody's upgraded Philippine's outlook to positive from stable. The pair started at 43.640 and rose to 43.680 in the morning session. But it quickly turned lower and hit a session low of 43.205 after the upgrade.
Dollar/won fell as South Korean exporters such as shipbuilders sold the pair for month-end settlements and interbank speculators cleared long positions. The country's financial markets were closed on Monday when most Asian currencies rose after a poll showed Greek pro-bailout conservatives lead in run-up to next month's election.
"The mood changed a bit. It may be wrong to buy dollar on dips unconditionally," said a foreign bank dealer in Seoul. US dollar/Taiwan dollar slid on foreign inflows after ruling KMT Party proposed a capital gains tax plan late on Monday that favours stock investors more than a controversial earlier plan put forward by the cabinet.
The island's exporters also sold the pair, especially above 29.600 for month-end settlements, dealers said. Still, interbank players hesitated to sell the pair further, seeing the slide as a correction, dealers said. It needs further improvements in global risk sentiment to fall further, they added.
US dollar/Singapore dollar fell as local and European investors sold on rallies. The pair traded up to 1.2803 from early low at 1.2771 following sell-off in the euro and the Australian dollar. Trades said the sales were triggered by suspicions that the Monetary Authority of Singapore was supporting the local currency at 1.2800 versus the greenback.
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