Asian regional currencies rose against the US dollar on Tuesday, even as suspicion grew that central banks were in the market to restrict further gains.
The Singapore dollar traded in a narrow range just shy of a 44-month peak of 1.6970 per dollar hit on Monday. The Thai baht, Taiwan dollar and Indonesian rupiah traded near highs last seen in mid-October and the South Korean won touched three-week highs.
The region-wide bullishness also helped the troubled Philippine peso to a two-month high of 55.06 per dollar.
"It seemed like the peso was lifted with the regional tide," said Rovic De Guzman, head of trading at Union Bank of the Philippines.
Dealers in Manila said as the peso rose above the 55.15 level, where most corporate dollar buying orders were placed, players scrambled to get out of short dollar positions and in the process pushed the peso higher.
The peso was Asia's worst performer in 2003, giving up about four percent of its value against the dollar on worries about the economic and political outlook of the Philippines.
Dealers said with the dollar now hitting fresh lows against the euro almost daily, and with the yen around September 2000 highs, Asian currencies were set to rise further.
Another suspected intervention by the Bank of Japan, after one on Monday, only helped to pull the yen slightly away from the 106 level and had a modest impact on regional currencies.
Analysts said on a trade-weighted basis most Asian currencies should have weakened because most of them have lagged gains in other currencies versus the dollar.
Jimmy Koh, head of research at Singapore's UOB Bank said that despite the Sing dollar's recent gains, the currency was still more than one percent weaker from the mid-point of the central bank's trade-weighted policy band.
Thio Chin Loo, an analyst at BNP Paribas said that meant currency players would continue to build long Sing dollar positions against the US dollar.
"This only means that the Sing dollar has room to appreciate on a nominal basis against a universally weak dollar," she said.
Dealers said the most aggressive players in the market were offshore investment banks and funds bidding almost all Asian currencies higher against the dollar.
"People believe that the US is very happy with the weak dollar situation and the Europeans and Japanese are not opposing it sufficiently so until they see things prove otherwise they are going to continue selling the dollar," said Simon Flint, strategist at Bank of America in Singapore.
Dealers said US dollar purchases by some local or state-run banks in Singapore, Thailand, Taiwan and Korea early on Tuesday had raised suspicion that central banks were trying to manage the currency gains.
China's announcement that it had pumped $45 billion into two of its debt-ridden state banks had no impact on the yuan or other currency markets in the region.
The transaction was made late last year and analysts said it probably involved a direct transfer of assets from the central bank's reserves without any currency exchanges.