Most emerging Asian currencies eased on Thursday as investors cut long positions ahead of the European Central Bank's monetary policy decision later in the day. The falls in regional currencies were limited as data showing China's imports unexpectedly rose for the first time in nearly two years in August, while exports fell at a more modest pace, suggested international trade was picking up, which would be positive for Asia's export-driven economies.
The South Korean won slid as the foreign exchange authorities kept warning against further gains in the best-performing emerging Asian currency so far this year. The Philippine peso hit a one-month low on equity outflows. Indonesia's rupiah edged down after its central bank governor said on Wednesday the government's tax amnesty programme would likely yield only a fraction of the revenues targeted, which could cause the fiscal deficit to swell. Investors were awaiting outcome of the ECB's policy meeting. Stephen Innes, senior FX trader for FX broker OANDA in Singapore, expected any decision by the ECB to extend its asset purchase programme would "support the carry and EM Asia".
"EM Asia still attractive in low rate environment," Innes said. "But I'm treating the event secondary to September 20-21 series when the BOJ and Fed lays down their cards. I view that as the next major hurdle for EM." The Bank of Japan and the US Federal Reserve hold their monetary policy meetings next week. The won fell as a foreign exchange official told Reuters that the currency's volatility has been greater than regional peers and the authorities are watching the situation very closely.
Offshore funds cut their won holdings as the comment came a day after warnings that the authorities would act to curb further strength in the won. South Korea's importers also bought dollars for payments on dips. The peso slid as much as 0.4 percent to 46.87 per dollar, its weakest since August 9. Foreign investors were net sellers of Manila stocks in the first five sessions of the month, the Philippine Stock Exchange data showed. A senior Philippine bank currency trader in Manila said foreign sentiment toward the Philippines's markets appeared to o deteriorated in recent days due to President Rodrigo Duterte's strained ties with the United States.
One trader said he was looking to sell the peso until "the stock market stabilises and offshore negative sentiment dissipates." Still, the peso is seen having a chart support at 46.865, the 50 percent Fibonacci retracement of its appreciation from July through August, analysts said. The next target would be 46.905, a 200-day moving average, they added.
Comments
Comments are closed.