The Singapore dollar and Malaysian ringgit retraced some of this week's losses while some other Asian currencies fell on Wednesday, torn between a retreat in the US dollar and persisting doubts about global growth.
The dollar stayed near a six-month high against a basket of major currencies, losing some of its momentum as investors weighed the risks to global growth and the continuing turmoil in financial markets against the reasons for the turnaround in the US currency.
Falling commodities and growth concerns in the euro zone and Australia have also sparked a sell off in high-yielding currencies and a rally in funding currencies, such as the yen. Asia was a mixed bag, with low-yielding currencies such as the Singapore dollar, Taiwan dollar and ringgit rallying against the US dollar while other such as the Indian rupee slumped further.
"A lot of guys are trying to buy the dollar on dips," said one Singapore-based trader. "But there's also some profit-taking on dollar/Asia by US houses after the run up in the last few days. There's good two-way interest at the moment." Lower oil prices also underpinned many of the currencies in Asia, most of which imports the expensive commodity. US crude oil futures hovered near a 3-month low and have declined for three sessions.
"The markets are so choppy," said BNP Paribas strategist Thio Chin Loo. "There's dollar buying against major currencies too, so we have got to see whether this translates to dollar/Asia buying." The Singapore dollar was quoted around 1.4040 per US dollar, coming off this week's five-month trough of 1.4145. The ringgit o rallied 0.4 percent, further away from a 2008 low of 3.3350 per dollar struck this week.
The Philippine peso rallied initially to 44.52 per dollar and then slipped to 44.73, a three-week low. "Dollar/peso opening was low because of lower oil. But it was higher after that because some foreign banks had demand," said a trader in Manila.