Emerging Asian currencies were mixed on Wednesday with the South Korean won pressured by profit-taking on worries about Greece's ability to restructure its debt, while the Thai baht broke through a resistance line helped by inflows. The regional units rose against the yen with the Malaysian ringgit and the Taiwan dollar hitting their highest versus the Japanese currency since August.
The yen has been weak against other major currencies since the Bank of Japan's surprise monetary easing last week. Early Wednesday, most emerging Asian currencies slid against the dollar as investors covered short positions in the US dollars on renewed concerns over Greece and on higher oil prices.
Even if the new Greek aid package eased fears of an immediate default, its economic outlook remained anything but rosy, a problem that could yet derail its efforts to meet comply with tough austerity steps. Geopolitical tensions in the Middle East surrounding Iran's nuclear activities are expected to support oil prices, which hit a nine-month high on Tuesday, forcing Asian oil importers to pay higher bills.
"I don't see extreme downside pressure on emerging Asian currencies currently," said Sacha Tihanyi, senior currency strategist for Scotia Capital in Hong Kong. Dollar/won rose on short-covering, but exporters' supplies capped its rises. Dollar/baht fell below a 200-day moving average support level for the first time since mid-September, on inflows to Thai stocks and bonds. Some traders said the break of the average at 30.672 prompted stop-loss dollar sales.
If dollar/baht ends the day lower than the moving average, it may head to 30.530-30.470. The pair has support at the 61.8 percent Fibonacci retracement of its July-January rise at 30.530. The 30.470 is the October-low where rallies to 31.920 started. Dollar/Philippine peso rose on short-covering. Macro accounts also covered short positions in offshore non-deliverable forwards (NDFs). But the pair gave up much of its earlier gains as leveraged names sold it and interbank speculators joined the move when dollar/peso failed to stay above 42.80. Dollar/ringgit started the day higher on short-covering, but most of the rise was erased when Malaysian exporters sold the pair.
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