Asian currencies bounce back, but nervous after Federal Reserve statement

Asian currencies bounced back on Thursday from early losses driven by the US dollar's rebound against major currencies after the Federal Reserve hinted it may be closer to raising interest rates.
Still, markets remained nervous about the US dollar's direction and regional central bank intervention.
The Philippine peso was led by its domestic problems of political and policy uncertainty to a lifetime low of 56.22 per dollar, where it found support from suspected central bank intervention. It still ended at a record closing low of 56.01.
The Korean won fell from an offshore 3-1/2 month high near 1,168 per dollar to 1,175 and then retraced some of that loss.
The Singapore dollar retreated a cent from Wednesday's highs near 1.6890 and then settled around 1.6970.
"We've seen a fair amount of people covering some risk and I don't think it is G7-related but more the Fed statement that saw the dollar go up more broadly," said James Malcolm, currency strategist with J.P. Morgan.
The yen was on the firmer side of 106 per dollar, but markets remained worried about its direction and also watched for signs regional central banks would seize on the dollar's rebound as an opportunity to push their own currencies down.
Markets had been positioned for Asian currencies to rise before the February 6 and 7 meeting of the Group of Seven industrial nations' finance ministers in Florida.
Thursday's moves were primarily driven by the Fed's dropping the phrase referring to a "considerable period" of loose monetary policy from its statement.
Even the bird flu outbreak across many parts of Asia, which hit markets in Thailand and Indonesia quite hard this week, seemed to have been relegated to the back burner, analysts said. The Taiwan dollar was the least affected by the regional downtrend and stayed around 33.36/39 per US dollar, just slightly off the previous day's 1-1/2 year high of 33.27.
The peso struck 56.22 per dollar in the morning, its lowest ever, as concerns intensified after Philippine army officers accused Defence Secretary Eduardo Ermita of ordering the surveillance of opposition politicians in the run-up to elections on May 10.
Philippine Central Bank Deputy Governor Amando Tetangco told reporters month-end import demand for dollars, the Fed's statement and rumours of a destabilisation plot by rogue soldiers were hurting the peso. At Thursday's lows, the peso was down 1.3 percent this month.