Emerging Asian currencies barely stirred on Friday amid caution before Federal Reserve Chairman Ben Bernanke's speech later in the day, but regional units were set for a mixed monthly performance as hopes of imminent Fed policy easing faded. The Taiwan dollar rose slightly on exporters' demand for settlements, while the Philippine peso advanced as interbank speculators cleared bearish positions before the weekend.
The Indonesian rupiah eased on local corporates' month-end dollar bids, despite intervention by the central bank and its warning that it was prepared to take further action to support the local unit. Still, investors hesitated to make aggressive bets on emerging Asian currencies, nervously looking to whether Bernanke will give any hint on monetary stimulus at an annual informal meeting of central bankers in Jackson Hole, Wyoming.
But investors have already scaled back expectations that Bernanke will provide strong indications of more bond-buying programme, or quantitative easing. That is expected to put pressure on emerging Asian currencies in September, dealers and analysts said. "Risk is to the downside because Bernanke is unlikely to hint strongly on QE at Jackson Hole," said Frances Cheung, senior strategist at Credit Agricole CIB in Hong Kong, when asked about the outlook for emerging Asian currencies.
Emerging Asian currencies' performances in August have been mixed. Last month, most regional units rose on hopes for policy actions by central banks of both sides of Atlantic. In August, the rupiah, the peso, the South Korean won and the Singapore dollar all lost ground against the dollar, while the Thai baht, the Malaysian ringgit and the Taiwan dollar have gained, according to Thomson Reuters data.
The rupiah was the worst performer with a 1.3 percent slide against the dollar so far this month, data showed, amid worries about deteriorating liquidity and bond outflows. Bearish bets for the local unit hit a near two-month high in the last two weeks, a Reuters poll showed on late Thursday. The Taiwan dollar edged up in thin trading with slight demand from exporters. Foreign financial institutions did not show decisive directions.
But few traders looked to add bets in either way before the Jackson Hole meeting. The island's currency has risen 0.3 percent versus the greenback so far this month. The peso edged higher as traders cut long dollar positions in thin trading, with investors keeping an eye on Bernanke's comment. A Jakarta-based dealer said the central bank's intervention was seen at 9,565 per dollar and 9,570.
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