Most emerging Asian currencies pared their losses on Tuesday after a stronger-than-expected China factory survey calmed some of the concerns over a slowdown in the world's second-largest economy. Activity in China's manufacturing sector unexpectedly picked up in September with the HSBC/Markit Flash China Purchasing Managers' Index (PMI) rising to 50.5 from August final reading of 50.2. It was higher than a forecast of 50.0 in a Reuters poll.
The survey helped regional shares recoup all of earlier losses. Emerging Asian currencies, however, were still in the red as China's factory employment slumped to a 5-1/2-year low in September, the same survey showed. That would be a potential source of concerns for Communist leaders who prize social stability above all else. "A higher number is better than a bad one," said Jeong My-young, Samsung Futures' research head in Seoul.
"I still doubt if the PMI would support Asian currencies further as it does not mean that the Chinese economy is reviving and it may reduce chances of more stimulus." The People's Bank of China injected money into the country's top banks to support the economy, the official Xinhua news agency on Friday quoted the chairman of number two lender China Construction Bank as saying. The won fell as foreign investors were set to become net sellers in Seoul's main stock exchange for a fourth consecutive session.
The currency pared most of its earlier losses after the improved news on China, South Korea's top exports market. Local exporters also bought the won for month-end settlements. The peso lost as much as 0.3 percent to 44.605 per dollar, its weakest since April 30. The Philippine currency has chart support at 44.618, the 61.8 percent Fibonacci retracement of its appreciation between February and July. "It can be a decent level to sell dollar/peso," said a senior Philippine bank trader in Manila. The peso may drop to 44.790 - a low hit on April 25. If that level is breached, the next target is at 44.955, the 76.4 percent retracement of its February-July appreciation, analysts said.
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