The South Korean won hit its lowest level in more than eight months on Monday, leading slides among emerging Asian currencies, due by pressures from increasing geopolitical tension with the North and the weakening yen. The Taiwan dollar touched an eight-month nadir on foreign financial institutions' selling, while the Philippine peso fell to its lowest in nearly five months on continuous profit-taking in bonds. Offshore funds sold the won, while custodian banks joined the offers as foreign investors continued to dump Seoul shares.
The won fell 0.7 percent to 1,140.2 per dollar in local trade, its weakest since July 27. That came even as some traders suspected intervention by foreign exchange authorities in Seoul to support the won. "The won's weakness became a trend once it weakened past 1,135," said Lee Jin-woo, research head at NH Investment & Futures in Seoul.
Technically, the South Korean unit is seen heading to 1,153-1,155, levels last seen in July, analysts said. Movement around an atomic test site in North Korea indicates the reclusive state may stage another nuclear test, a South Korean minister said on Monday, an act that would further escalate tensions on the Korean peninsula.
The Taiwan dollar lost as much as 0.5 percent to 30.090 per US dollar, its weakest since August 3 as heightened tensions on the Korean peninsula along with fears about the spread of bird flu in China hurt risk appetites. "The Taiwan dollar fell mainly as the Korean won and the Japanese yen depreciated. Concerns over the North Korea situation and weaker stocks also weighed on it," said a Taiwan bank trader in Taipei.
The Taiwan dollar has eased 2.9 percent against the greenback this year, while the yen and the won have lost 12.2 percent and 6.1 percent respectively, according to Thomson Reuters data. The Philippine peso fell as much as 0.4 percent to 41.315 to the dollar, its weakest since November 16, according to Thomson Reuters data.
Investors continued to take profit from the country's bonds, while tensions with North Korea dented investor confidence in the relatively risky local currency, traders said. "There's a possibility for the peso to weaken to between 41.50 to 42.00," said Alan Cayetano, Bank of the Philippine Islands' head of FX trading in Manila. "Positioning has been highly skewed in favour of long peso over a long period in expectation of the investment grade rating upgrade. Now that it's there, its time to lock in profits and wait for the next wave," said Cayetano.
Comments
Comments are closed.