The Philippine peso hit a fresh six-year high on Wednesday, boosted by news of strong remittances, while attention turned to the yuan ahead of a meeting between Chinese and US officials next week.
The Philippine central bank said on Tuesday that Filipinos working overseas had sent home $1.3 billion through official channels in March, a jump of 26 percent from a year earlier. That helped push the high-flying peso to about 46.92 per dollar, up a third of a percent from Tuesday's close and its highest level since early 2001. The peso had received a boost on Tuesday from the relatively smooth passage of elections, which pushed the currency through the 47-per-dollar mark.
"On top of that, we have had one of the biggest monthly remittances of the year," said a trader in Manila. Driven by the remittances, the country's balance of payments surplus rose to $282 million in April, more than double the previous month's figure, the central bank said on Wednesday.
The Indonesian rupiah bounced back to 8,780 per dollar after slipping as low as 8,830 in early trade as investors bought dollars to cover short positions exposed by the currency's move last week to one-year highs. Deputy central bank governor Aslim Tadjuddin said on Tuesday that the rupiah's fluctuation was within an acceptable range, but that Indonesian monetary authorities would intervene in the foreign exchange market if needed.
The Malaysian ringgit rose through the psychological level of 3.4 per dollar, but only briefly. Some traders suspected the authorities were preventing the ringgit from holding above that level, even though officials have said they were not worried about the currency's strength.
"The market is virtually dead in the past few days. I believe central bank agents are supporting the 3.4 level," said a trader in Kuala Lumpur. Most Asian currencies were steady, but analysts remain bullish about their underlying strength, given the region's solid economic fundamentals and expectations that the US Federal Reserve may cut interest rates this year.
"We also see the Brazilian real, Turkish lira and other emerging currencies are doing quite well. That helps boost sentiment," said Shahab Jalinoos, a currency strategist at ABN Amro.
The lira hit 1.323 per dollar on Wednesday, its strongest level this year, thanks to money inflows, while the real surged above 2.0 per dollar for the first time in six years on Tuesday as foreign cash poured into the country.
The Chinese yuan inched up to 7.6820 per dollar. Many analysts expect the pace of its appreciation to quicken in coming weeks as Beijing may seek to soothe foreign critics before the meeting next week of senior Chinese and US officials. Vice Premier Wu Yi will lead a delegation of top Chinese officials to Washington for a strategic economic dialogue with Treasury Secretary Henry Paulson and other senior US officials.
"I think we will probably see that between now and next week because of the political point China wants to score," said Jalinoos, referring to a pick-up in yuan appreciation. The yuan has gained 5.6 percent since it was revalued by 2.1 percent to 8.11 per dollar in July 2005, but it has gained just 1.6 percent so far this year, trailing most Asian currencies.
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