The Taiwan dollar and the South Korean won led Asian currencies higher on Tuesday on expectations they will benefit if the Federal Reserve decides to buy more bonds and unleash more cheap money. Asian currencies that have underperformed over the past two months, such as the Malaysian ringgit and Indonesia rupiah, may catch up with the other currencies if the Fed decides to buy more than the $500 billion that many in the market expect, analysts said.
On the other hand, outperforming currencies such as the Taiwan dollar and the won could be vulnerable to profit taking if the Fed decides to be less aggressive. The Taiwan dollar closed Tuesday at 30.699/USD after extending a rally to 27-month highs in early trade, rebounding from a suspected central bank move earlier in the day.
Taiwan's currency hovered around 30.52/USD in early trade. Taiwan's central bank would step up intervention if easing in the United States caused hot money to flow into the Taiwan dollar, which would hit exporters, analysts say. The Philippine peso opened at 43.00/USD, courtesy of the suspected central bank action, after overnight NDF closing suggested a lower open around 42.80-42.82.
The peso has since rose to 42.76/USD, with dollar sellers plentiful. The central bank is suspected to be stalling peso gains but should give way towards higher levels. NDFs are trading at slight discount due to heavy selling pressure offshore. The 1-month NDF was last at 42.78-42.88/USD.
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