SINGAPORE: Most emerging Asian currencies fell on Wednesday as the Federal Reserve refrained from offering signals on more policy easing, with the Malaysian ringgit trying to clear support, although regional units found relief from strong stocks.
Expectation of yuan weakness also increased, adding to the pressure. China's Premier Wen Jiabao said Beijing will allow the yuan to float more freely and the People's Bank of China widens the currency's trading band through its mid-point.
On Tuesday, the Fed gave few clues on the prospects for further monetary easing but the US central bank offered a slight upgrade to its economic outlook.
"Investors cut bets on Asian currencies as hopes for more US quantitative easing weakened. But the Fed is not absorbing liquidity yet and Asia will not see outflows soon. A firm dollar backed by a strong economy has not been bad to Asian currencies, historically," said Jeong My-young, a currency strategist at Samsung Futures in Seoul.
"Still, we may not see strong long-betting on Asia as long as investors are worried about slowing economies such as China and in Europe," Jeong added.
The concerns have prompted investors to take profits from emerging Asian currencies, main beneficiaries of inflows from ample liquidity bolstered by major central banks' monetary policy easing to boost growth.
But data from the United States pointed to a sustained recovery in the world's top economy, supporting emerging Asian currencies.
US retail sales posted their largest rise in five months in February, data showed on Tuesday.
Easing concerns over a slowing European economy, Germany's ZEW economic think tank's monthly sentiment survey jumped in March to its highest level since June 2010, confirming hopes that Europe's largest economy has recovered from a weak patch.
RINGGIT
Dollar/ringgit rose above a Fibonacci resistance on short-covering. Funds and interbank speculators rushed to buy the pair on worries about bond outflows, dealers said.
It advanced to as high as 3.0495, above the 76.4 percent Fibonacci retracement of its February slides.
If the pair clears the retracement at 3.0462, it may head to 3.0630, its February high and near a 55-day moving average at 3.0627.
But some dealers doubted if it could rise further amid caution over possible dollar-selling intervention by the central banks.
Earlier, some dealers spotted selling by agent banks of the central bank around 3.0430.
WON
Dollar/won rose on demand from offshore funds and bids linked to foreign investors' recent stock sales.
The pair was more supported as South Korea's Vice Finance Minister Shin Je-yoon said it was not appropriate to use the won to deal with higher oil prices.
But local exporters such as shipbuilders took the gains as chances to sell it on rallies, dealers said.
"The recent range is getting stronger with risk-on factors offsetting a firm dollar. But downside for dollar/won would be limited," said a foreign bank dealer in Seoul.
Dollar/won has moved between 1,111.8 and 1,132.4 since February.
SINGAPORE DOLLAR
US dollar/Singapore dollar rose on a weaker yuan, but the pair found an immediate resistance at 1.2630, a cluster of highs on the hourly charts.
The next resistance level is seen at 1.2654-58, the high of March 6 and a 55-day moving average.
A clear break of this resistance is required to signal a move to 1.2714, the rebound high in February.
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