Asian currencies under pressure

Most Asian currencies fell on Monday as investors readjusted positions amid fears of rising global interest rates, but dealers said the sell-off had little to do with a sharp fall in the New Zealand dollar. The ringgit fell as far as 3.4785 per dollar, down about half a percent, hitting its weakest level since March 21.
The Singapore dollar fell as far as 1.5460 per dollar, down about 0.5 percent, to a five-month low as some investors took profits after the currency's recent gains. "Decent-sized gains for most Asian equity markets translated to little buying of non-Japan Asian currencies, fitting our view that global repositioning has a way to play out yet and it is not likely to be too supportive of Asian FX as it does," Sean Callow, a currency strategist at Westpac Bank, said in a research note.
The New Zealand dollar tumbled 2 percent from near a 22-year peak against the US dollar on Monday as the central bank intervened to cap the currency's rise.
But dealers and analysts said its fall had little impact on emerging Asian currencies. "I don't expect the move to have any major impact on other currencies, it's a kiwi phenomenon," said Magnus Prim, chief Asia currency strategist at SEB.
Analysts are generally positive about the long-term strength of Asian currencies, although they caution that high-yielding currencies face near-term selling pressure.
"Generally, we are looking for stronger currencies (in Asia), but we are not putting them all in the same bracket - some of the currencies are not as positive as others," Prim added. The high-yielding rupiah gave up its earlier gains and weakened to 9,100 per dollar as investors fretted about potential risk from rising global interest rates.
The rupiah fell almost 3 percent last week, fuelled by heightened risk aversion. "I think the rupiah is going to range trade between 8,900 to 9,100," said a dealer in Singapore. Philippine markets were closed for a public holiday.
J.P. Morgan strategists Claudio Piron and Yen Ping Ho expected the ringgit, rupiah and peso to see further selling pressure, although the volatility could be limited by central banks.
"While we acknowledge that position liquidation could continue into the immediate term in view of the US treasury yield rise and dollar strength, we stress that rising global yields have been the result of better global data rather than an outright inflation scare," they said in a research note.
"In this context, Asia FX is only likely to recover when evidence of benign inflation is confirmed toward the end of this week," they said. But the Indian rupee bucked the downward trend. It strengthened as far as 40.82 per dollar, up nearly 0.8 percent from Friday, when the currency hit its lowest level in nearly a month.