The won ended its best week in 14 months on Friday as foreign investors continued to snap up South Korean stocks, leading weekly gains among emerging Asian currencies, as global investors looked to a meeting of G20 officials for further signals on foreign exchange policy. The won rose 1.6 percent against the dollar for the week, its largest percentage gain since the week ended December 4, 2011, according to Thomson Reuters data.
The Singapore dollar and the Philippine peso both looked set to rise 0.2 percent on the week, also buoyed by inflows. While growing concerns over upcoming general elections weighed on the Malaysian ringgit on Friday, it edged up 0.1 percent on the week. The Indonesian rupiah posted a similar performance.
That came as the yen paused in its recent weak trend ahead of a meeting of G20 finance ministers and central banks on Friday and Saturday in Moscow. Russia's Deputy Finance Minister Sergei Storchak said the passage on currencies in a G20 communique will not single out Japan's expansive policies, but officials are expected to spar over the moves, which have sharply and swiftly driven down the yen. Over the last two weeks, optimism over emerging Asian currencies has recovered, with investors rebuilding bullish bets on the won, a Reuters poll showed on Thursday.
Still, investors say gains in regional units will be kept in check as the yen is expected to remain weak due to Japan's reflationary policies and deficits. "Regardless of the G20 meeting result, the yen will fall again as the market will focus on Japan's trade and current account deficits," said Yuna Park, a currency and bond analyst at Dongbu Securities in Seoul.
The won touched 1,076.6 per dollar, its strongest since January 25 on demand from offshore model accounts and exporters. It found more support from demand linked to foreign investors' stock purchases. Traders expected dollar supplies linked to ING's sale of a 5 percent stake in South Korea's KB Financial Group. Some speculated about dollar offers linked to the deal. The Dutch financial service group said it sold the shares for about $672 million to institutional investors.
Technically, the won is seen having room to 1,075.3, a 55-day moving average. The next level would be 1,074.5, its low on January 25. The ringgit slid as interbank speculators scrambled for dollars in thin trading on increasing caution over the upcoming election. Malaysian parliament will only be dissolved when all quarters, including the people, are ready for the polls, Prime Minister Najib Razak was quoted by national news agency Bernama.
"Nobody will go home with short dollar/ringgit positions," said a Malaysian bank dealer in Kuala Lumpur, adding the ringgit may head to 3.1140 to the greenback, its low on January 31 when the Malaysian currency suffered from bond outflows and selling from real money funds. That level was softest since September 7 last year, but the ringgit showed signs of being excessively sold on January 31 with dollar/ringgit's relative strength index (RSI) above the 70 threshold.
The trader said investors were worried too much about the election. The rupiah eased on dollar demand from local corporates with domestic banks buying the greenback around 9,660 per dollar, traders said. However, freign banks bought the rupiah near 9,680, which traders said was linked to bond inflows, limiting its downside, traders added. On Thursday, Indonesia's finance ministry raised 9.95 trillion rupiah ($1.03 billion) at a debt auction, higher than its indicative target of 7 trillion rupiah. The central bank took more steps to stabilise the rupiah.
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