Most emerging Asian currencies fall

Most emerging Asian currencies fell on Thursday as the US Federal Reserve's policy announcement disappointed some investors who had expected more aggressive easing while soft China data added the gloom. The Philippine peso and the Malaysian ringgit suffered from dollar short-covering, while the won rose on demand linked to Ontario Teachers Pension Plan's deal to purchase a stake in South Korea's Kyobo Life Insurance.
The Fed extended its so called 'Operation Twist' programme of selling short-term securities and buying longer-dated ones as expected, but did not signal another round of quantitative easing that some investors were expecting. "People are very disappointed and unwound short-dollar positions into the Fed," said a senior Malaysian bank dealer in Kuala Lumpur. Emerging Asian currencies extended declines after the HSBC Flash Purchasing Managers Index (PMI) survey showed China's factory sector contracted for the eight month in June with export orders and prices turning in their weakest showing since early 2009.
That came a day after the US central bank slashed its forecast for US economic growth. "If risk aversion sets in globally, all move is in tandem. It is best to avoid open economy currencies until we are for sure global growth will recover," said Saktiandi Supaat, head of FX research at Maybank in Singapore, adding that the Malaysian ringgit and the Singapore dollar could be those units. Dollar/rupiah rose on dollar demand from local and foreign banks. The pair rose 0.5 percent to 9,460 per dollar, according to indicative prices on Thomson Reuters, but dealers said trades were taking place at higher rates.
The central bank was spotted offering dollars at 9,460, they added. A Jakarta-based dealer said dollar/rupiah would rise more, but the central bank may cap around 9,475-9,485. Dollar/peso rose as local interbank players and offshore funds covered short positions, dealers said. Dollar/won turned slightly higher on short-covering. Earlier, the pair fell, bucking against slide in other dollar/Asian currencies, as dealers said a local bank sold about $200 million for Ontario Teachers Pension Plan's deal to buy a stake in South Korea's Kyobo Life. On June 7, a South Korean newspaper said the pension was chosen as the preferred bidder for a stake worth $398 million held by state-run Korea Asset Management Corp. Offshore model funds and domestic exporters also sold the pair earlier.