Taiwan dollar, won soar

The Taiwan dollar and the South Korean won rose on exporter demand, leading gains among emerging Asian currencies on Thursday, although caution over impending US jobs data and worries about political turmoil in Portugal capped their gains. Investors also covered short positions in regional units such as the Philippine peso while trading was subdued. Outperformance in the Taiwan dollar and the won may indicate some optimism on those currencies, although US non-farm payrolls for June will decide their fortune, said Jeong My-young, Samsung Futures research head in Seoul.
"For a longer term, the won and the Taiwan dollar are likely to be low-beta currencies with large current account surpluses and low valuations," Jeong said. (Beta reflects relative volatility.) "But given a big event tomorrow, they are not free from higher volatilities in Asian currencies for the time being," she added, referring to the US nonfarm payrolls report due on Friday.
The won has gained 0.6 percent since Federal Reserve Chairman Ben Bernanke said on June 19 the central bank may taper its quantitative easing later this year and end the stimulus in 2014, according to Thomson Reuters data. The Taiwan dollar also has advanced 0.5 percent since the comments were made.
That compared with a 0.7 percent slide in the Indian rupee and a 0.2 percent loss in the Indonesian rupiah during the period. The currencies suffered more than other regional currencies on worries about the countries' current account deficits. The Taiwan dollar advanced on corporate demand in thin trading. Taiwanese exporters bought the island's currency around 30.05. The Taiwan dollar also found support from a firm yen.
Still, the Taiwan dollar's upside was limited by importers' bids for the greenback around 30.00. Investors were also nervous of possible intervention by the central bank. On Wednesday, the South Korean currency suffered its largest percentage fall in nearly two weeks, but the won rose on Thursday as exporters bought it for settlements and some interbank speculators trimmed dollar holdings.
"Sentiment is not that bullish on the won, but market forces did not help long dollar positions," said a senior foreign bank trader in Seoul. Foreign investors also sold Seoul shares, although the main index rose. The peso gained as investors cut long positions in the dollar amid a lack of corporate demand for the greenback, traders said. But some traders sold the peso into rallies on caution before the US jobs data. "I would prefer long dollar positions because of expectations that the NFP may be good," said a foreign bank trader in Manila.