Asian currencies slipped on Tuesday as investors fretted about the fallout from lofty oil prices, forcing several central banks to step into the market to prop up their battered currencies. The Philippine peso briefly fell to 43.73 per dollar, down about a third of a percent from Monday's close to its lowest level since early November.
"The BSP (central bank) is providing some offers. I guess they must have sold around 200 million (dollars)," a trader said. The Indonesia rupiah fell to a four-month low at 9,380 to the dollar at one point as traders cited dollar-selling intervention by Bank of Indonesia to support the local unit.
The South Korean won rebounded to 1,034.9 per dollar from as low as 1,051.8 after dealers said the authorities were selling dollars. Analysts say the won, the peso and Indian rupee are particularly vulnerable to rising oil prices, and further currency weakness in the countries could push up trade deficits.
"Speculators have turned to long dollar versus selected Asian currencies," said Sean Callow, currency strategist at Westpac. "A year ago, it was a simple 'sell dollar/Asia' story but now it's very mixed - buy some, sell others," he said. Oil prices hovered near $133 a barrel, little changed from the previous day when news of another attack on Nigerian oil facilities raised concerns on immediate supplies.
The Malaysian ringgit fell as low as 3.254 per dollar, down almost 1 percent from late Asian trade on Monday. "There is some negative sentiment towards Singapore and Malaysian assets," said David Mann, a currency strategist at Standard Chartered Bank.
"Worries over the fiscal cost of fuel and food subsidies are also an issue for the ringgit," he said. The Thai baht fell as far as 32.34 per dollar, down more than 0.6 percent to its weakest level since May 16. Analysts at J.P. Morgan said in a note that Thailand's sluggish domestic demand would help sustain a favourable current account surplus, at a time of renewed political concerns in the country.
"However, the downside is that private investment is weak and inventories are building amid political uncertainty, and the Bank of Thailand will be reluctant to permit any aggressive baht appreciation resulting from a current account surplus," they said.
The baht has gained about 4 percent versus the dollar so far this year, trailing behind the Taiwan dollar, the Singapore dollar and the Chinese yuan. The Singapore dollar lost a third of a percent to 1.3635 to the US dollar. One trader noted that Singapore's industrial production data for April, published on Monday, was far worse than expected, with output down a seasonally adjusted 16.2 percent from March.
"If 1.3640 breaks, the market may go for stops at 1.3650-60," the trader said. But most analysts still expect the Singapore dollar to rise against the US currency as the authorities use currency appreciation to tackle inflation, which is running at a 26-year-high. The Chinese yuan pulled back to 6.9443 per dollar from its post-revaluation high of 6.9361 hit on Monday, but the yuan is seen rising further as policy makers fight inflation.