SINGAPORE: Most emerging Asian currencies slid on Wednesday as investors cut holdings in risky assets due to fresh doubts over Greece's bailout, with the Indonesian rupiah hurt also by a weak debt auction.
Investors are likely stay clear of the sector, waiting for clarity as some Greek pension funds and foreign investors hold back a bond swap deal that will cut Athens' mountainous debt by a Thursday deadline.
A low participation in the private sector involvement (PSI) bond swap plan, a key part of a bailout to help Greece meet a debt repayment on March 20, could lead to the disorderly default policymakers have been toiling to avoid.
The renewed Greek concerns pointed to more corrections for emerging Asian currencies, dealers and analysts said.
"I don't think Asian currencies have priced in risk aversion flows for the Greek PSI as most investors expect Greece to survive this year," said Saktiandi Supaat, head of FX Research at Maybank in Singapore.
The Indian rupee, the South Korean won and the Malaysian ringgit were seen as more vulnerable than others as they have benefited from inflows in recent months, he said.
Westpac Singapore-based foreign exchange strategist, Jonathan Cavenagh, said he was avoiding the rupee and the rupiah as the currencies looked vulnerable to inflation and capital outflows, while preferring the ringgit and the Singapore dollar.
The rupee and the rupiah underperformed other emerging Asian currencies, each losing 0.5 percent against the dollar.
The Singapore dollar was the best performer among emerging Asian currencies with a 0.3 percent gain versus the greenback as European names bought the city-state's currency on a rebound in the euro.
Still, many currency dealers hesitated to add large short positions in emerging Asian currencies as the currencies could find support again if US job data later this week indicates a sustained recovery in the world's top economy.
RUPIAH
Dollar/rupiah rose after a weak Indonesian debt auction on Tuesday and on global risk aversion.
Local and foreign banks bought the pair, while the central bank was spotted selling it, dealers say.
An Indonesian debt auction on Tuesday attracted only weak demand as investors worried a planned fuel price hike will boost inflation.
"The result was not completely a surprise as caution has prevailed in the bond market due to the inflation story," said Gundy Cahyadi, an economist at OCBC Bank in Singapore.
"Most investors are now waiting for the timing of the fuel price hike, its actual impact on inflation and BI's response following that. Some pressure may continue to weigh on the IDR for now," he added.
WON
Dollar/won rose, although South Korean exporters took the gain as a chance to sell the pair, cutting its gains. Offshore funds joined the selling.
In the afternoon, Finance Minister Bahk Jae-wan also said exchange rate fluctuations in the won were having a greater impact on domestic inflation than on foreign trade.
"The market is stuck in a range between 1,115 and 1,130. That's what the FX authorities want, I think," said a senior foreign bank dealer in Seoul.
PHILIPPINE PESO
Dollar/Philippine peso advanced on demand from interbank speculators as global risk aversion hit Philippine stocks.
But it erased most of the initial gains as investors looked to sell the pair on rallies, seeing a resistance line at a 200-day moving average, which currently stands at 43.127. It has been lower than the average since late January.
"The market is comfortable to sell near 43.10. I am looking to sell near the 200-day moving average," said a European bank dealer in Manila.
RINGGIT
Dollar/ringgit rose slightly, but it also gave up some of the initial gains as interbank names took profits.
"I will cut short positions, but I won't add long positions yet," said a Malaysian bank dealer in Kuala Lumpur.
"I want to watch Greece PSI first, but it is even unthinkable that they cannot solve this problem," the dealer added.
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