Asian currencies were pushed lower on Monday as markets scaled back their expectations for an imminent Chinese yuan revaluation and for the upcoming Group of Seven nations' meeting to put more pressure on the region. That happened after fresh comments from Chinese top officials suggested they were in no hurry to reform the yuan regime, and the US dollar found support ahead of key data and a Federal Reserve policy meeting.
Traders braced for a volatile week that will end with the Group of Seven nations' meeting in London on Friday and Saturday and could see US rates raised by another 25 basis points.
US Treasury Under-secretary John Taylor added to the pressure on regionals with his remarks that there was no need for the dollar to crash and that the G7 statement would not be different from the one issued last year in Florida. Officials from China, India and other emerging economies have been invited to talks with the seven industrialised nations.
The Korean won fell from near Friday's 7-year high of 1,023 a dollar to around 1,026.
The Singapore dollar fell about a quarter percent to 1.64 a dollar and then trimmed losses. The Thai baht and Indonesian rupiah were down.
There was talk of intervention in Singapore and in the Philippines, where the peso barely moved after its rapid 2.3 percent gains in 3 weeks, helped by a 12 percent rally in stocks
Bhanu Baweja, currency strategist with UBS, said even if the G7 called on Asia to share in the adjustment of the massive US trade deficit by letting currencies rise, the region would not oblige readily.
"Even if the rhetoric is stepped up on level to burden-sharing, I believe it will not be very significant for currency moves."
"What is central for Asian authorities is that economic growth in most areas is clearly off the peak. They will continue to intervene to protect against sharp appreciation in their currencies, thereby trying to keep exports competitive," he said.
The Philippines released data on Monday showing annual gross domestic product grew 6.1 percent in 2004, the quickest pace in 15 years. But growth in the last quarter of 2004 was disappointing, and analysts warned the currency market was probably overestimating potential investment inflows and remittances.
Meanwhile, the see-sawing on the prospects of China revaluing its virtually pegged yuan continued, with China's deputy central bank governor Li Ruogu dashing expectations by saying China did not have the capacity to address global economic imbalances and was not willing or able to do it.
The premium on one-year yuan in non-deliverable forwards was down to 3,850 points, pricing in 4.9 percent gains, compared with 5.6 percent on Friday.
Global oil prices fell, with US oil below $47 a barrel, after Opec producers left output unchanged and Iraq's election passed without disruption to oil exports.
"The dollar will bounce this week," said Claudio Piron, currency strategist with J.P. Morgan.
"Oil prices are lower and that should help the dollar. The Fed FOMC will be delivering 25 basis points and positioning in Asia is very aggressive," he said.
Piron said the north Asian currencies would suffer, but that markets would be divided on whether to buy the won against the yen.
The yen-won cross rate showed the yen at 9.89 won.