Currencies in emerging Asian countries rose sharply on Thursday amid broad dollar weakness with the rupiah, won and baht hitting around one-year highs as risk appetite increased after US industrial output rose in August. The peso hit a one-month highs and the ringgit climed to its highest in more than eight months. "Beyond technical levels, the rally in Asian currencies is synchronising with rising risk appetite and a rally across emerging market assets," J.P. Morgan said in a report.
A rally in the Indonesian rupiah persisted, with the currency rising to as high as 9,560 to the US dollar, the strongest level since October 2008, after Moody's upgraded the sovereign ratings by a notch to Ba2. The rupiah jumped on stop-losses triggered by the dollar's drop through 9,900 per dollar and position-cutting ahead of a 6-day holiday. Profit-taking took the rupiah back to 9,620.
Still, it is up about 15 percent against the dollar so far in 2009. "Moody's was definitely a catalyst," says a trader in Singapore, referring to Wednesday's sovereign credit rating upgrade. "But the street didn't expect the spot to break 9,900 so easily, and they were all caught long. And with the long holidays coming up, the onshore buyers of dollar are also not there, so liquidity has been really thin."
WON, RINGGIT, PESO The won rose to about 1,204 per dollar, the highest since October, but gave up some gains due to the South Korean government's mixed comments on interest rates and US dollar-buying intervention by the central bank. The ringgit firmed to as high 3.46 to the dollar after data showed that Malaysia's second-quarter current account surplus fell to 28.8 billion ringgit ($8.3 billion) and portfolio outflows slowed.
The peso rose to a one-month high of 48.36 per dollar after the Philippine central bank announced that the country's August balance of payments surplus was $53 million. "The large positive oil-driven swing in the trade balance was predictable, so the surprises are the positive swing in net portfolio inflows and steady as opposed to falling remittances," said Tim Condon, an economist from ING.
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