Asian currencies were a mixed bag on Thursday as a suspicion central banks were intervening halted rallies in the Singapore dollar and the north Asians while the Thai baht and Indonesian rupiah rose on recovering stock markets.
Asians started the day slightly weaker as their stock markets succumbed to the drop in US stocks on Wednesday.
But as Chinese offshore forwards renewed their move to price in a greater appreciation of the tightly managed yuan and foreigners flocked back to Asian stock markets, some of the currencies resumed gains.
The Indonesian rupiah rose as far as 9,010 per dollar, its highest in two months, as markets positioned for currency gains after the presidential elections on Sept. 20.
The Thai baht's rise was capped around 41.20, near Wednesday's seven-week high of 41.18.
"Everyone's buying Asian equities. Seems to be a mix of bargain-hunting in stocks and the view that one must hold as little of fixed income as possible when yields are rising," said one Singapore-based trader.
Also, Chinese yuan non-deliverable forwards moved to price in a higher premium on the yuan, and that provided another boost to the Asians.
Market attention is focused on China ahead of an Oct. 1 Group of Seven meeting in Washington, to which China has been invited. On Wednesday, US Treasury Secretary John Snow called for accelerated currency reform in China.
One-year NDFs were quoted at 2,800 points, pricing in an appreciation of 3.5 percent in the yuan in a year. The yuan is effectively pegged around 8.28 per US dollar.
But the fear of intervention and in some cases suspicion of actual central bank dollar-buying capped some of the regionals.
The Sing dollar stayed between 1.6890 and 1.69 a dollar, unable to re-visit this week's four-month high near 1.6880.
"Asian central banks were out yesterday, putting a steady hand on things," said David Simmonds, markets strategist with the Royal Bank of Scotland.
"Secondly, the dollar rallied a bit on some second-tier data," he said. "It's no surprise to see dollar/Asia better bid," he said, although he added that the rise had been limited.
Analysts said there was also selling of the Sing against currencies of its trading partners by funds speculating the currency had appreciated to the highest end of the undisclosed trade-weighted band authorities manage it in.
The Taiwan dollar held between 33.80 and 33.90 a dollar and the Korean won fell to 1,147 but returned soon to straddle 1,145 for a fourth day.
These two currencies failed to follow the rest of the region higher this week amid suspicion their central banks were active in the market to prevent large moves.
The Indian rupee was forced off two-month highs near 45.70 on Wednesday after the central bank was reported to be making enquiries. On Thursday, it was pushed closer to 46 by dollar-buying by state-owned banks.