Emerging Asian currencies slipped against the dollar on Wednesday as investors covered short positions in the greenback on dwindling chances for more policy stimulus by the Federal Reserve and for fresh regional inflows. Regional units also tracked a weaker Australian dollar with the growth currency hitting an 11-week low on the country's surprise trade deficit for February.
Fed policymakers have backed away from considering another round of monetary stimulus as the US economy gradually improves, minutes of their March meeting showed on Tuesday. "Asia ex-Japan FX are now at the cusp of pricing in the risk of no more QE3," said Suresh Kumar Ramanathan, regional rates and foreign exchange strategist at CIMB Investment Bank in Kuala Lumpur, referring to another round of quantitative easing.
"With little backing from portfolio flows, we think Asian FX may remain vulnerable to discretionary USD volatility," said Emmanuel Ng, foreign exchange strategist at OCBC in Singapore. On Wednesday, investors took profits from emerging Asian currencies amid the sluggish mood, after rises earlier this week on solid US and China manufacturing data. But some dealers said regional units are likely to keep finding support from inflows.
"Initially, I had expected dollar/Asia to rise much higher, but markets stayed heavy. That indicates Asia still has inflows," said a senior Malaysian bank dealer in Kuala Lumpur. Dollar/won rose on short-covering and South Korean importers' demand for payments. Custodian banks also bought the pair as market players expect dollar-demand that's linked to local companies' dividend payments to foreign shareholders.
Dollar/baht jumped as local banks and companies chased the pair with a break above 30.90. As the pair cleared the 38.2 percent Fibonacci retracement at 30.86 of January-February slides, dollar/baht may head to 31.04-31.06 where a 100-day moving average and the 50 percent retracement sit. Dollar/baht also has the top of the daily Ichimoku cloud near 31.06, implying the level would be a resistance. Some members of Thailand's monetary policy committee expressed concerns over inflation, minutes of the March 21 policy meeting showed. Dollar/ringgit rose on short-covering by local interbank players. The pair found more support as the Australian dollar lost ground after release of the Australia trade data, dealers said.
Comments
Comments are closed.