Exporters lift won, Taiwan dollar

The South Korean won hit a 14-month high on exporter demand, leading gains among emerging Asian currencies, although investors remain concerned over US fiscal problems and Greek aid uncertainty, and are wary of intervention by regional authorities. The won found more support as interbank speculators cut dollar holdings to stop losses. The foreign exchange authorities were not spotted buying dollars to limit the local currency's upside.
The Taiwan dollar also gained on demand from exporters, although the central bank's request on Tuesday to onshore traders to report their trades before actual dealing limits speculative activity in the Taiwan currency, dealers said. "Investors still dare to buy Asian currencies as there has been no crash over the US 'fiscal cliff' yet and on some hopes for a deal in the first quarter of the next year," said Yuna Park, a currency and bond analyst at Dongbu Securities in Seoul, adding that the medium and long term outlook for regional currencies is still bright.
"But the US and European issues cannot only cause a correction but also seriously limit their upside. We also need to be careful on Asian intervention," Park said. Investors have been focusing on how divided US lawmakers will handle the impact of automatic spending cuts and tax hikes, which may threaten to push the world's top economy into recession.
Greece could be another hurdle to emerging Asian currencies, although a German newspaper said Germany wants to bundle Greek aid into a single payment of more than 44 billion euros. Finance Minister Wolfgang Schaeuble later said such an idea was under consideration. But that cannot happen until Greece's lenders reach a broader agreement. The International Monetary Fund and euro zone policymakers remain at odds over a long-term target to bring Greece's debt down and the IMF's push for the euro zone to take further losses on the debt.
The won ended domestic trade at a session high of 1,084.9 per dollar, its strongest since September 9, 2011. Earlier, Doosan Heavy Industries and Construction Co Ltd said it had a 1.1 trillion won ($1.01 billion) letter of award to build a desalinisation plant in Saudi Arabia.
"The won would be able to rise further as exporters appeared to get more nervous, although we may see guerrilla-style intervention," said a foreign bank dealer in Seoul, referring to sporadic dollar bids by the authorities when exporters are away. The Taiwan dollar gained on exporter demand for settlement. Offshore investors also bought the local unit in non-deliverable forwards (NDFs) with the one-month US dollar/Taiwan dollar NDFs down to 28.890.