SINGAPORE: Most emerging Asian currencies rose on Thursday on hopes that Greece will clinch a bond-swap deal and on healthy US jobs data, but the Indonesian rupiah fell as the central bank held rates steady despite an expected pick-up in inflation.
The South Korean won gained as worries eased that authorities would intervene to stem its strength, while the Philippine peso jumped after a short-squeeze.
On Wednesday, major banks and pension funds threw their weight behind Athens' bond swap offer to private creditors, raising the likelihood that the deal will go through and a 130 billion euro international bailout package would be secured. That helped Asian stocks and the euro rise.
Also, the ADP National Employment Report showed that the US private sector added more jobs than economists' forecast and the Wall Street Journal reported that Federal Reserve officials are considering a new approach to bond-buying.
Still, investors remained cautious, waiting for completion of the Greek deal and US payroll figures due on Friday, which may determine whether the recent, liquidity-driven rally in riskier assets continues, or prompt a sharp pullback.
"Emerging Asian currencies will rise more if we see the Greece deal and the euro continue to rise," said a senior dealer at a Malaysian bank in Kuala Lumpur.
"But it is very uncertain and I don't think it would ignite 'risk-on' much further because that is just a small step without solving fundamental problems," said the dealer, adding strong US job data had already been priced in.
Friday's report is expected to show a gain of 210,000 in nonfarm payrolls, with a rise in the private sector of 225,000 jobs offsetting a modest decline in government jobs.
Emerging Asian currencies suffered from profit-taking earlier this week on concerns over the private sector involvement (PSI) plan in the Greece bond-swap deal, as well as slowing economic growth in China and Brazil.
WON
Dollar/won fell after the finance minister said late on Wednesday that the local currency is having a greater impact on domestic inflation than on foreign trade.
The comment indicates foreign exchange authorities may allow the won to appreciate further, and be less inclined to intervene to stem its gains, dealers said.
"The remark boosted preference on short positions. They are more likely to use FX to control inflation as it is difficult to raise interest rates now," said a senior foreign bank dealer in Seoul, adding that the authorities may cap dollar/won's upside rather than downside.
Earlier, the Bank of Korea left its policy rate unchanged, as widely expected.
But the dealer did not see dollar/won breaking through the recent low of 1,111.8 soon, given importers' demand amid high oil prices. He also said market will see dollar demand linked to local companies' dividend payments to foreign shareholders in March.
PHILIPPINE PESO
Dollar/Philippine peso slid as investors dumped long positions to stop losses, dealers said.
Market players sold off the pair once it broke through 42.700 as it has a trendline support at 42.716, a European bank dealer in Manila said.
The trader added it has a room to fall more, probably to 42.60 and 42.08 eventually.
"I favor selling on rallies as the break of 42.60 is just confirmation (of a downtrend)," he said.
BAHT
The baht demand from Japanese players pushed dollar/baht down below a 200-day moving average, which currently stands at 30.682. On Tuesday, it rose above the average.
If the pair clears the 38.2 percent Fibonacci retracement at 30.597 of its February-March gains, it may head to 30.52, near the 50.0 percent retracement.
Dollar/rupiah spot and one-month non-deliverable forwards (NDF) rose slightly even though the central bank left interest rates unchanged as expected, and despite its admission on Thursday that inflation in 2012 could be above target due to fuel price hikes.
The currency has been under pressure from outflows amid worries about inflationary pressure. Some investors see values of Indonesian assets are too expensive.
Westpac's foreign exchange strategist Jonathan Cavenagh in Singapore said outflows may not slow down, given sustained worries about inflation.
But an offshore dealer says dollar/rupiah's upside may be limited as the Bank Indonesia (BI) pledged to stabilize the rupiah through foreign exchange and secondary bond markets. BI was spotted selling the spot, dealers said.
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