Asian currencies hit multi-month lows on Wednesday led by the Singapore dollar and Korean won, pressured by a falling Japanese yen and expectations the US will raise interest rates this week.
The Singapore dollar and Thai baht fell to eight-month lows, the Taiwan dollar and Indonesian rupiah hit two-month troughs and the Korean won hit its weakest level since February.
Political uncertainty, after Philippine President Gloria Macapagal Arroyo admitted it was her voice on recordings that have sparked calls for her to quit, dragged the peso to a fresh 5-month low of 56.05.
Arroyo said on Wednesday her husband, who is accused by opposition lawmakers of receiving bribes from gambling syndicates, will leave the country, but analysts said the move would not ease pressure on the president.
Costly oil and expectations the US Federal Reserve will announce on Thursday another quarter point rise in the fed funds rate, drove the yen to 8-1/2 month lows near 110.12 a dollar.
Analysts said these two factors would undermine the regionals in the short term, but the approaching meeting of the Group of Seven nations plus Russia (G8) in Scotland from July 6 to 8 would bring focus back to Asian currency revaluation.
"Obviously, oil and the FOMC are very much present on traders' minds and that means in the near term we could see higher highs in dollar/Asia," said Robert Rennie, a senior currency strategist with Westpac Bank.
But the run-up to the G8 meeting and still strong regional equity markets would thwart a deeper slide in the regional currencies, he said.
A Canadian official said on Tuesday the G8 nations will discuss the state of global growth, the impact of oil and fiscal imbalances.
US crude oil futures were trading on Wednesday more than $2 below Monday's record high close to $61 a barrel, but remained 33 percent above end-2004 prices.
Asia is a net importer of crude, with Thailand, Korea and the Philippines particularly sensitive to oil price movements.
Rising interest rates in the United States are also undermining the appeal of some of region's high-yielding currencies.
If the Fed raises rates by 25 basis points on Thursday, benchmark US rates would be at par with the Korean overnight call rate target of 3.25 percent.
The Sing dollar fell as far as 1.6870 per US dollar, its lowest point since October 2004. Traders said local banks had sold US dollars in early deals but were unsure if that had been on behalf of the central bank.
Wong Keng Siong, strategist with Bank of Tokyo-Mitsubishi, said higher oil prices would boost revenues for Singapore's refineries but were a drag on exports because of the potentially adverse impact on global demand.
"Employment generation is also in the non-oil sectors," he said.
Wayne Wong, a technical analyst with IDEAglobal, said the Singapore dollar had fallen beyond a strong technical support on a downward trending line extending from 2002.
The Sing's move beyond Tuesday's weakest point of 1.6835 also signalled further bearishness for the currency, he said.
But it could also mark a temporary US dollar spike, caused by heavy squaring of long positions in the Sing dollar, which could prompt a swift rebound to the firmer side of the trend-line, he said.
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