South Korea's won hit a more than five-month high as some analysts said the central bank chief eased views of a rate cut on Thursday, while emerging Asian currencies advanced with a tentative stabilisation in oil prices improving risk sentiment. The won rose as much as 1.3 percent to 1,136.0 per dollar, its strongest since November 5.
Earlier, the Bank of Korea kept interest rates unchanged for a 10th straight month and its governor stressed that the current rate level supports the economy, although a lowered growth forecast kept expectations of a slash alive. Governor Lee Ju-yeol said there was a limit to the degree which interest rate measures could work and fiscal and monetary policy should cooperate. His remarks were seen less dovish than expected, some analysts and traders said. Foreign investors sold South Korea's treasury bond futures.
"Given the Governor's comments, it looks difficult to expect a rate cut unless the economy deteriorates much further," said Shin Dong-su, a fixed-income analyst at Eugene Investment & Securities in Seoul. "We cannot completely rule out possibilities of a cut, but markets will unwind bets on it from now on as investors had priced in easing expectations." The won's appreciation accelerated as a break of a chart resistance level around 1,140 triggered stop-loss dollar selling among traders and offshore funds.
As the South Korean currency strengthened past the level, it has room to advance to 1,126.9, the 50 percent Fibonacci retracement of its depreciation from 2014 to 2016, analysts said. Still, caution grew over possible intervention by the foreign exchange to stem its strength. Malaysia's ringgit advanced more than 1 percent as a sharp drop in crude output in Kuwait due to a worker strike underpinned oil prices. Other commodity currencies gained with the Australian dollar hitting a 10-month high. Most of the government bond prices, especially ones of 20- and 30-year debts, rose.
The Taiwan dollar rose on inflows from foreign financial institutions after offshore investors were net buyers in the stock market in the previous four consecutive sessions. Traders hesitated to add more bullish bets on the island's currency ahead of March export orders data later in the day. Orders for exports are forecast to have slumped for the 12th month in a row last month, reinforcing a gloomy outlook for the local economy and suggesting few signs of any recovery in overseas demand, a Reuters poll showed. Exporters did not buy the Taiwan dollar, seeing the current prices around 32.300 per US dollar as unattractive. Thailand's baht crawled up 0.3 percent to 34.91 against the greenback, its strongest since March 22. Foreign investors turned to net buyers in the Bangkok stock market on Monday, first time in seven sessions, spurring hopes for more equity inflows on better risk sentiments. Local shares rose 0.7 percent. Still, the baht has a chart resistance at the session high, the 76.4 percent retracement of its depreciation in March, analysts said.
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