The Thai baht weakened as political violence worsened in Bangkok with three people killed in gun battles on Tuesday, while the Indonesian rupiah led slides in other emerging Asian currencies. A Thai police officer and two protesters were killed in the shooting, while dozens of people were wounded as Thai authorities launched their most offensive operation yet against protesters seeking to topple the government.
Indonesia's rupiah slid on month-end corporate dollar demand and as investors booked profits from the best performing Asian currency so far this year. The South Korean won fell on dollar demand from offshore funds and domestic importers as the currency was seen unlikely to strengthen past 1,060 per dollar.
The Philippine peso eased dollar bids linked to daily fixing and dollar-short covering, traders said. The rupiah fell on month-end corporate dollar demand, while South Korea's won eased as offshore funds and domestic importers bought dollars. "Given Asian currencies' recent appreciation, they may see some more correction, even though a lack of risk aversion is likely to cause some to buy them on dips," said Yuna Park, a currency and bond analyst at Dongbu Securities in Seoul.
"Still, such trading is only for a short term. Asian currencies are on a falling trend, at least in the first half, on the Fed tapering and a slowing China," Park added, referring to the US Federal Reserve's cut in its monthly bond-buying programme. The rupiah fell on dollar demand from local companies such as importers for month-end payments and as investors took profits from the best performing emerging Asian currency so far this year.
The Indonesian currency may see more correction as approaching month-end corporate dollar bids usually increase. Still, investors were looking to buy the rupiah on dips for higher yields amid the country's improving economic fundamentals. "Some investors looked to be interested in selling dollar/rupiah around 11,880," said a Jakarta-based trader.
Credit Agricole CIB recommended buying one-month rupiah non-deliverable forwards to the dollar for a target of a spot rate of 11,128. The baht fell as foreign banks sold it to book profits due to signs of the political turmoil worsening. "Thailand still has a political wrangling problem and won't go away any time soon," said a Thai bank trader in Bangkok, adding the baht may weaken past 32.50 per dollar in a week or a month.
The won eased on dollar demand from offshore funds and importers as the won was seen unlikely to strengthen past 1,060 per dollar. The peso fell on dollar demand-linked daily fixing and as investors covered short dollar positions. "Some correction is needed given oversold dollar conditions in the short term," said a senior trader at a Philippine bank in Manila, adding the peso has room to weaken to 44.71, its high on Friday.
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