Asian currencies stall at multi-month peaks

The Indian rupee, Indonesian rupiah and other Southeast Asian currencies stalled after hitting multi-month peaks on Wednesday as markets booked profits and pondered how much currency appreciation authorities would tolerate.
The Singapore dollar firmed through another key level at 1.69 per dollar to hit fresh four-month highs near 1.6880, amid speculation the authorities might widen the trade-weighted band in which the currency is allowed to move, at a review meeting next month.
Surging stock markets and foreign portfolio inflows drove the Thai baht and the Indonesian rupiah to seven-week highs of 41.18 and 9,050 per dollar respectively, before they retreated very slightly.
Analysts said foreign investors seemed to be seeking Asian assets because there were few alternatives. And some of these currencies would now meet with resistance.
"People are getting forced towards Asia because some of the other emerging markets stuff is not doing so well," said James Malcolm, strategist with Deutsche Bank.
But Indonesia's stock and currency markets would not be able to sustain their recent gains beyond the September 20 presidential elections, Malcolm said.
The Indian rupee bounced off a fresh two-month high of 45.695 per dollar after traders reported the central bank had made enquiries, although it was still up over a percent since last week.
"India is a little bit confusing from a macro perspective because the currency is already about two percent expensive on real-effective-exchange rate terms and, simply from the inflation trends, it is going to get more expensive," Malcolm said. "We certainly know that they prefer a higher currency at the moment to help them with the monetary tightening, but I can't see it moving greatly from here," he said. Meanwhile, the US dollar and yen were caught in tight ranges after data showed the US current account deficit surged to a record in the second quarter and retail sales fell in August.
Markets are waiting for a Federal Reserve policy meeting next week, expecting US rates will be raised again.
In north Asia, the Korean won was virtually unchanged and the Taiwan dollar spent the day slightly higher around 33.80, with markets suspecting the authorities in these two countries were controlling movements in their currencies.