The Indonesian rupiah and Philippine peso rallied on Monday, bouncing back to levels before a recent sell-off as investors' appetite for riskier assets improved, and other regional currencies followed them higher.
The high-yielding rupiah rose to 8,920 per dollar, gaining about 1.4 percent from late Asian trade on Friday and hitting its highest since June 8, when the currency slid 2.4 percent amid jitters over rising global interest rates.
"There has been a lot of (dollar selling) offshore due to an overnight drop in New York. Some regionals like the ringgit and the Singapore dollar strengthened quite a bit. The rupiah's following that pattern as well," said a dealer in Jakarta.
But he expected the rupiah to face resistance near 8,870. It remains one of Asia's worst performers this year, having risen just 0.7 percent against the dollar. The dollar remained under pressure against the euro on Monday after dipping on Friday after a lower-than-expected rise in core consumer price inflation.
The Malaysian ringgit rose as high as 3.425 per dollar, gaining 1 percent and hitting its highest level in more than a week, while the Singapore dollar rose 0.3 percent to 1.5368 per US dollar. UBS analysts recommended going long on an equal-weighted basket of the ringgit and rupiah against the dollar via three-month non-deliverable forwards.
"Despite the sharp ringgit and rupiah weakness during the recent bout of risk adjustment, we think little has changed fundamentally, and that the rebounds in dollar/ringgit and dollar/rupiah have provided good levels to go long these currencies again," they said in a research note to clients.
The peso, another high-yielder that has picked up steadily since the recent sell-off, rose to 45.92 per dollar, up about 1 percent and hitting its highest level since June 6.
A trader in Manila said the peso was boosted by data showing strong capital inflows on Friday and the benign US inflation figure, which reduced the chances of an interest rate rise.
Official remittances from Filipinos working abroad rose 32.6 percent in April from a year earlier to $1.19 billion, the 12th straight month that the figure has topped $1 billion, the central bank said on Friday. Most Asian currencies got a boost from rising stock markets, with the MSCI index of Asian stocks outside Japan hitting a record high.
The yield on benchmark 10-year Treasuries eased to 5.16 percent in Asia on Monday, pulling back further from five-year peaks above 5.3 percent hit last week. The US inflation report on Friday showed US consumer prices, excluding volatile food and energy items, rose just 0.1 percent in May, half the increase expected by Wall Street.
There was little spillover impact on emerging Asian currencies from suspected New Zealand central bank intervention aimed at limiting the rise in the local dollar.
The South Korean won rose as far as 926.7 per dollar, its highest in more than a week, and stayed near its highest in a decade versus the yen, prompting the central bank to voice concern over the country's widening trade deficit with Japan. The Chinese yuan eased to about 7.6278 per dollar after hitting a post-revaluation high of 7.6218 in early trade.
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