Most Asian currencies sag

Most emerging Asian currencies sagged on Thursday, with the Philippine peso taking a breather after a recent rally and the South Korean down in part due to jitters over potential central bank intervention. Asian currencies slipped after a disappointing Spanish bond auction the previous day helped drag the euro off a seven-week high, giving a lift to the dollar.
Their losses were limited, however, with investors looking to budget negotiations in Washington and the US Federal Reserve's policy meeting next week for direction hints, said Rob Ryan, strategist for RBS in Singapore. "We're really treading water in many respects ahead of the Fed next week and more importantly the fiscal cliff at the end of December," Ryan said.
Many market players are optimistic that US lawmakers will reach a deal before year-end to avoid the fiscal cliff of tax hikes and spending cuts that could pull the US economy into recession. The Fed's December 11-12 policy meeting is another potential risk for Asian currencies, said Ryan at RBS, adding that the dollar could be boosted if the Fed announces monthly Treasuries purchases that fall short of market expectations.
The won edged lower, pulled down by concerns about the potential for more intervention by local authorities to slow the currency's appreciation. The South Korean won stood at 1,083.2, staying below a 14-month high of 1,080.2 to the dollar on November 22. The peso slipped to 40.915 to the dollar after starting Thursday's trade at 40.850, which matched its highest level since March 2008. Since late November, the peso has touched 40.850 several times, including earlier this week.
Andy Ji, Asian currency strategist for Commonwealth Bank of Australia in Singapore, said that as the Singapore dollar has been trading near the top of the central bank's policy band over the last couple months, some traders have recently made bearish bets against it. Such players seem to be betting that the US dollar would get a lift due to concerns about the fiscal cliff, he said.