Emerging Asian currencies rose on Friday as the yen rebounded after Japanese Finance Minister Taro Aso warned against the currency's recent swift fall, although most regional units were set for another week of losses. The yen gained as Aso earlier described the currency's weakening as "too rapid," but ruled out intervention to halt the slide.
South Korea's won rebounded from a near 15-month low as investors covered short positions and on demand from exporters for month-end settlements. The Malaysian ringgit advanced as traders also cut bearish bets. Still, emerging Asian currencies are unlikely to extend gains as the yen remains on a broadly weakening trend, traders and analysts said. The Japanese currency pared some of its sharp gains as Prime Minister Shinzo Abe dissolved parliament's lower house for a snap election on December 14.
"The yen's move today is just a correction as the recent slide was seen excessive. Its depreciation trend remains intact," said Yuna Park, a currency and bond analyst at Dongbu Securities in Seoul. "Asian currencies may rebound a bit, but they are not free from the yen. In addition, the dollar will stay firm too," Park added. Most emerging Asian currencies were already poised to post weekly losses, led by the won, as the yen hit a seven-year low against the dollar on Thursday.
The won has lost 1.1 percent against the dollar so far this week, on course for its fourth week of declines, according to Thomson Reuters data. That would be the longest weekly losses since May last year. South Korea's foreign exchange authorities were suspected of intervening to check the won's strength against the yen on concerns its exporters will erode their competitiveness against Japanese rivals.
The Taiwan dollar has slid 0.5 percent with the island's exporters also seen vulnerable to weakness in the yen and the won. The ringgit has fallen 0.3 percent. India's rupee and the Philippine peso have eased 0.2 percent each. The Indonesian rupiah stood firm in the face of falls in regional peers, having risen 0.4 percent, continuing to benefit from President Joko Widodo long-awaited decision to raise fuel prices and free up funds to rejuvenate Southeast Asia's biggest economy. The currency also has been underpinned by the central bank's surprise rate hike, which was aimed at tempering an expected upsurge in inflation following the fuel-hike move.
China's yuan has gained 0.1 percent on expectations of inflows thanks to a new link between the Hong Kong and Shanghai stock exchanges.
WON The won pared some of its daily gains as traders sold the currency when it rose above 1,110 per dollar with the authorities suspected of intervening. Against the yen, the won lost as much as 0.6 percent to 9.4536. On Thursday, the South Korean currency hit a six-year high of 9.3660.
"It is a great chance to lift the yen/won," said a foreign bank trader in Seoul, referring to the yen's rebound on Friday. The ringgit rose as investors covered short positions, tracking the yen's rebound. Still, the upside in the Malaysian currency was limited due to persistent concerns over a slowing economy. Malaysia's inflation rose 2.8 percent in October from a year earlier due to higher fuel prices after the government cut subsidies, data showed.
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