Most emerging Asian currencies rose on Tuesday as soft US housing data prompted investors to cut bets for the Federal Reserve to scale back stimulus soon, while the Indonesian rupiah hit a fresh four-year low. The Thai baht hit a three-week high, boosted by higher stocks, and the South Korean won gained on foreign stock buying.
The rupiah bucked overall strength in regional currencies on sustained dollar demand from domestic companies, while the central bank allowed indicative prices to match traded levels, traders said. Regional currencies appreciated as the US dollar and Treasury yields slid after an unexpected fall in US home resale transactions in June strengthened perceptions the Fed may not rush to cut its $85-billion monthly bond-purchase programme.
"More investors are weighing the possibility of sustained quantitative easing for the short term," said Yuna Park, a currency and bond analyst at Dongbu Securities in Seoul.
"The weak home data cemented expectations that the Fed may not exit anytime soon, supporting emerging Asian currencies," Park added. Top Fed officials, including Chairman Ben Bernanke, have said that the timing of tapering would be decided on the basis of improvement in economic conditions.
Still, gains in emerging Asian currencies were capped as investors are keeping an eye on the HSBC flash PMI for China to get clues on the health of the world's second-largest economy. The baht advanced as much as 30.85 against the dollar, the strongest since July 2, as Thai shares jumped more than 1 percent and on catch-up buying after a holiday. Financial markets in Thailand were closed for a holiday on Monday when most emerging Asian currencies gained.
But investors hesitated to lift the baht beyond 30.80 on expectations of dollar demand from importers and caution over intervention by the central bank to stem volatility, traders said. The won gained as foreign investors increased purchases of Seoul stocks and on exporters' demand for month-end settlements. Still, investors stayed wary of potential dollar-buying intervention by the foreign exchange authorities to stem the currency's upside, traders said.
Local importers' dollar bids for payments limited the won's gains, as the currency has a chart resistance at 1,113.7 per dollar, the 61.8 percent Fibonacci retracement of its depreciation between May and June. "Some players looked for short-dollar positions, given firm local stocks and other Asian currencies, but importers and intervention caution kept the won's upside," said a South Korean bank trader in Seoul.
"Still, the won is seen gradually rising," the trader added. The rupiah lost as much as 2.0 percent to stand at 10,250 per dollar, its weakest since August 2009, on month-end corporate dollar demand, traders said. But the move was exaggerated as the currency's indicative prices matched traded levels, traders said. The central bank had kept the rupiah's indicative prices stronger than dealt levels to alleviate concern over the currency's weakness, according to traders. Still, the state-run banks were spotted providing dollar liquidity such as at the 10,215 and 10,200 levels, to support the rupiah, traders said. "I think BI wants 10,150 to 10,250 levels," said a Jakarta-based trader.
Comments
Comments are closed.