Asian currencies were calmer on Wednesday after the previous day's volatility, with the Singapore dollar edging up from two-month lows, while the Indonesian and Philippine units gave up some of their stellar gains.
On Tuesday, the Indonesian rupiah and Philippine peso jumped around 1 percent and the Singapore dollar fell sharply as investors dumped low-yielding currencies in favour of higher-yielding ones amid a pick up in risk appetite. Having moved a long way in a short space of time, Asia's currency markets were now taking a breather.
The rupiah touched a fresh three-year peak at about 8,650 per dollar, but then retreated to around 8,695 - down slightly from where it stood late on Tuesday. The Philippine peso backed off Tuesday's peak of 45.82 - its strongest level in more than six years - to the weaker side of 46 per dollar.
Both the Malaysian ringgit and Indian rupee were steady near nine-year highs. The Singapore dollar scrambled off Tuesday's two-month low of 1.5340 to the US dollar and the Taiwan dollar held above Tuesday's 1-1/2 year low of about 33.43 per US dollar.
"The market is looking to consolidate a little and waiting for the next big news to move," said Emmanuel Ng, currency strategist at OCBC Bank. "On the high-yielders front, the market is still optimistic on the ringgit, rupiah, peso and rupee."
Dealers said that as well as a resurgence in carry trades, the selling of low-yielding currencies to fund high-yielding assets, domestic bonds and stocks in Indonesia and Philippines had their own investment merits anyhow.
In Indonesia for instance, bonds in particular have seen strong foreign demand on expectations of lower interest rates. The sale of Indonesia's first 30-year bonds were heavily oversubscribed in an auction on Tuesday.
The government sold 4.3 trillion rupiah, or around $500 million, of 20-year and 30-year bonds compared with an initial target of 3 trillion rupiah. Traders in Manila said the peso had been due a slight pullback after racking up its biggest one-day gain against the dollar in about five years.
"Yesterday was something for the record books and we did see $1 billion in volume," said a Manila trader. "That was because of a mix of regular flows and euphoria in the stock market. We should at least see some consolidation now as the market takes a breather - that would be healthy."
Analysts said short-term sentiment towards the Singapore dollar remained bearish since a fall in domestic interest rates had encouraged investors to use the Singapore dollar as a funding currency for carry trades. "There does seem to be diverging trends in Asia," said Thio Chin Loo, a currency strategist at BNP Paribas. "The Singapore dollar will be more defensive and is likely to be sold for the high yielders."
Elsewhere, the Thai baht was steady in onshore trade at about 34.57 per dollar, showing little reaction to a widely expected decision by the Bank of Thailand to cut its key interest rate by 50 basis points to 3.5 percent.