Won rises, rupiah slips

The South Korean won rose on foreign inflows, leading slight gains among emerging Asian currencies on Thursday, while the Indonesian rupiah slid after the country posted a larger-than-expected current account deficit. The Malaysian ringgit advanced on bids from interbank speculators and some exporters. The Singapore dollar edged higher on stop-loss selling of the US dollar.
Still, regional units gave up much of their initial gains as the yen slid again. "Firmer risk sentiment helped Asian stocks and currencies, but investors do not have a strong conviction for a clear direction yet. They can unwind risk positions any time," said Jeong My-young, Samsung Futures' research head in Seoul. Emerging Asian currencies have been under pressure from a softer yen as its weakness dented export competitiveness of Japan's neighbours such as South Korea.
Regional authorities have expressed concerns over the appreciations of their currencies, a result of policy easing by major central banks including the Bank of Japan. Investors are now looking out to a meeting of the Group of 20 finance ministers and central bankers in Moscow on Friday and Saturday to gauge their possible response to the yen's recent weakness.
The won advanced as foreign investors continued to buy South Korean stocks and bonds. Offshore funds also purchased the currency, traders said. Currency investors showed muted reactions to the central bank's decision to leave interest rates unchanged as expected. Technically, the won also has chart resistance between 1,080 per dollar and 1,083.
"Dollar supplies were pretty strong, but I don't think the won would strengthen past 1,080. It is locked in a range between 1,080 and 1,100," said a senior foreign bank dealer in Seoul. The rupiah slid on dollar demand from local importers, bucking the overall strength in its Asian peers. On Wednesday, the country reported a 2012 current account deficit equivalent to 2.7 percent of gross domestic product, wider than an initially forecast 2.4 percent.
Investors stayed cautious over possible dollar-selling intervention by the central bank to support the rupiah, traders said. Bank Indonesia is gradually closing trading loopholes used by global investors in an attempt to exert more control over its weakening currency and prevent a desirable depreciation of the rupiah from turning into a panicky tailspin.
The ringgit gained as interbank speculators bought it, while some exporters started selling dollars for settlements. Still, investors hesitated to add bullish positions in the ringgit further on continued caution over the upcoming election in mid-2013. "Most people prefer to buy the dollar on dips at 3.08. Some uncertainty over the election will also help long dollar/ringgit positions," said a senior Malaysian bank trader in Kuala Lumpur.
The Singapore dollar rose against the US dollar on stop-loss selling of the greenback, traders said. Some offshore investors also bought the city-state currency against the euro and the sterling, traders said. The Singapore dollar hit 1.9154 to the British currency, its strongest at least since 1982, according to Thomson Reuters data.