The Indian rupee led losses among emerging Asian currencies on Tuesday as investors took profits amid weaker regional stocks even though the European Central Bank chief Mario Draghi increased expectations of more monetary policy easing. "Such a stance is positive for INR asset prices but also indicates potential for conflict with the RBI," said Kowalczyk.
"Thus, while attracting capital inflows, it also introduces uncertainty regarding FX policy, and is likely to initially be INR-negative," said Kowalczyk in Hong Kong. The rupee's losses came as most emerging Asian currencies eased, tracking weaker stocks. The ringgit turned weaker as local interbank speculators took profits around 3.2050 per dollar ahead of a psychological resistance at 3.2000.
The Malaysian currency eased in non-deliverable forwards markets. Local importers also bought the dollar for month-end payments. Spot ringgit earlier rose on exporters' demand for month-end settlements. The Taiwan dollar rose on exporters' demand for month-end settlements around 30.110 against the US dollar. Domestic importers, however, bought the greenback around 30.070-30.080, limiting the Taiwan dollar's gains.
A trader in Taipei suspected the central bank of intervening around the level to stem the Taiwan dollar's gains. Some foreign financial institutions also purchased the US dollar, although the demand was not that strong, traders said. The baht edged up in thin trading as Bangkok shares rose while most Southeast Asian stocks eased.
Concerns over political instability in the wake of the military coup kept investors, especially foreigners, cautious. Foreign investors had been net sellers in the local stock market since May 20, when the army first imposed martial law prior to seizing full control. They dumped a net 23.4 billion baht ($717.8 million) worth of stocks during the period, according to Thomson Reuters data.
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