The South Korean won rebounded nearly 3 percent on Tuesday, leading Asian currencies higher as regional shares gained on tentative signs of stability in the global financial system. The won surged as high as 1,399.9 per dollar, its highest in just over a month, as investors who had previous bet on the wons weakness were forced to sell dollars to cut losses.
The won has been staging a sharp rebound since March 6, halving its losses versus the dollar this year to about 11 percent. "I think 1,380 will be the next target, depending on the performance of stock markets," said a trader in Singapore.
Investors cut their short positions in the won over the past month to the lowest since July, showing they are less bearish on the currency, according to a Reuters poll. Meanwhile, the Philippine peso gained almost 0.4 percent to 48.30 per dollar, but some analysts expressed concerns over its outlook as the countrys remittance inflows have slowed.
"I think the peso still moving in tandem with emerging currencies, although its pretty much ranging from 48.00 to 48.80," said a trader in Manila. Analysts at Goldman Sachs said they expected the peso to fall to 50 per dollar in the next six to 12 months, implying a three percent fall from the current spot rate. "Looking forward, we believe flows will be less peso supportive, as we expect remittances growth to slow in the coming quarters on a slowing global economy," they said in a note.
Remittances, a key pillar of the Philippine economy, edged up 0.1 percent in January - the slowest pace in five years, the central bank said Monday. The peso has fallen almost 2 percent versus the dollar so far this year, the second best performer among nine Asian currencies tracked by Reuters after the Chinese yuan. The won remains the worst performer despite the recent rebound.
Asian stocks rose, with the MSCI index of Asia Pacific shares traded outside Japan rising almost 1.7 percent. Barclays Plc said on Monday it has had a strong start to the year, echoing upbeat comments in recent weeks from Citigroup, J.P. Morgan and Bank of America, which have sent battered banking shares higher.
The Singapore dollar rose to 1.5317 per US dollar, up a fifth of a percent from Mondays close, as the countrys export data showed a less-than-expected drop in February. "We see a small reaction since the data was better than expected," said a Singapore-based trader. Singapores non-oil domestic exports fell 23.7 percent in February from a year earlier compared to a 27.5 percent slide expected by the market.