The South Korean won and Philippine peso edged up with the help of lower oil prices on Monday, but the Malaysian ringgit weakened after the central bank surprised markets by holding interest rates steady. The won climbed 0.4 percent to 1,005.4 per dollar, its strongest in almost two weeks after data showed the country's current account swung to a surplus in June.
Traders suspected the foreign exchange authorities gave the currency an extra leg up by selling dollars. Retreating oil prices, which fell to a seven-week low in the previous session, allayed some fears over inflationary pressures in oil-importer South Korea, as well as the Philippines. Lower crude prices also reduce importers' demand for dollars, easing the selling pressure on the local currencies.
The Philippine peso inched up by 0.3 percent, strengthening past the psychologically important level of 44 per dollar to 43.95. Some investors expected the central bank to raise interest rates when it reviews policy August. "The peso is being influenced by hints from the central bank of another 25-basis-point hike in August," a Manila-based trader said.
"The offshore market is selling dollar/peso right now," the trader said, indicating a bullish outlook for the peso. The Philippine central bank said it expected annual inflation to hit close to 12 percent in July and move slightly above that level through to November, according to a report seen by Reuters on Sunday.
The Malaysian ringgit fell 0.7 percent to a three-week low of 3.2685 per dollar after the central bank, Bank Negara Malaysia (BNM), unexpectedly decided to keep interest rates steady at 3.5 percent on Friday.
Analysts said the decision was likely to keep investors worried about the central bank's commitment to battling inflation that soared to a 27-year high in June ringgit and was set to keep the ringgit under downward pressure in the near-term.
"BNM (the central bank) will intervene to cap currency weakness, but the fundamental pressure clearly supports dollar/ringgit breaking higher in the short-term," HSBC strategist Daniel Hui said in a research note. A broadly stronger US dollar weighed on the Singapore dollar, which fell by 0.5 percent to 1.3646.
Still, analysts were bullish on the Singapore currency in the longer term. "We believe that Singapore is quite aware that inflation will blunt its long-term competitors, and that is one reason why among our favourite currencies, Singapore's is one of them," said V. Anantha-Nageswaran, chief investment officer at Julius Bar.
He expected the Singapore dollar to hit 1.20-1.25 by the end of the year and held a bullish view on Taiwan dollar. Markets in Taiwan were closed on Monday due to a typhoon, and trading is set to resume on Tuesday. The yuan crawled back by 0.2 percent to 6.8316 as investors reduced their expectations for the pace of yuan appreciation following a subtle but clear shift in policy signalled by Chinese authorities.
Comments
Comments are closed.