Most Asian currencies fell on Wednesday as investors shunned riskier assets because of fears of a US recession, but the Chinese yuan and Singapore dollar bucked the trend in a sign of the region's resilience. The high-flying Philippine peso fell as far as 40.81 to the dollar down half of a percent from Tuesday's close.
Some players moved to sell the peso via offshore non-deliverable forwards, which in turn affected the spot peso, said a Manila-based trader. The South Korean won hit a one-week low at 940.1 per dollar, down nearly 0.5 percent from late Asian trade on Tuesday, as local stocks fell 2.4 percent to a five-month low.
"As you can see in the stock market, foreign investors sold a lot today, that made everybody buy the dollar against the won," said Yun Jin Ko, a trader at Kookmin Bank in Seoul.
She expected the won to weaken to 950 to the dollar in the coming months if the key support of 943 were to be broken. The won and the Indonesian rupiah, Asia's worst performers in 2007, remain the region's laggards this year. MSCI's measure of Asia Pacific stocks excluding Japan tumbled 3.9 percent, taking its cue from losses on Wall Street after US data showed retail sales unexpectedly fell in December to close out the weakest year since 2002.
The weak data, alongside a report by Citigroup Inc of a record quarterly loss, fuelled concerns about a US recession and speculation the Federal Reserve may cut interest rates even before its next scheduled meeting on January 29-30.
Such fears pushed the dollar to a 2-1/2-year low against the Japanese yen. But the Chinese yuan hit another post-revaluation high of 7.2334 per dollar, bringing its total gains in the past month to 2 percent. Most analysts still expect the yuan to gain a further 7-9 percent against the dollar in 2008 after last year's 6.9 percent rise, as Chinese leaders try to put a lid on rising inflation.
The Singapore dollar briefly rose to 1.4264 per US dollar, matching a 10-1/2-year peak hit last week, as investors positioned for an expected Fed rate cut, but suspected buying of the US currency by the central bank limited its gains.
"There was some suspected intervention at 1.4270, so I guess players are wary," said a Singapore-based trader. The Thai baht, one of Asia's top performing currencies this year along with the peso, was little changed at 33.12 per dollar onshore. The Bank of Thailand held its key interest rate steady at 3.25 percent on Wednesday, as expected, to underpin a recovery in domestic demand even as inflation picks up.