The South Korean won and Indonesian rupiah rose on Wednesday as the dollar faltered globally in anticipation that the Federal Reserve will move later in the day to dampen expectations of higher US interest rates. Asian currencies generally firmed as the dollar sat on steep losses after tumbling sharply against the euro and other major currencies on Tuesday. Regional stocks rose on Wednesday, providing further support for Asian currencies.
WON: The won rose as far as 1,275.8 per dollar, rising just over 1 percent from Tuesday's domestic close, as investors bought local stocks. Analysts at Standard Chartered Bank said they expected the won rise to 1,170 over the next three months.
The won has been consolidating in recent weeks after a sharp rally from early March, but analysts said charts pointed to further won rises going forward. "We see the current move higher in dollar/won as being limited to the 1,300-1,365 resistance area, which should prove to be a good selling area," they said in a note published on Tuesday.
RUPIAH: The Indonesian rupiah briefly lost 0.7 percent to 10,510 per dollar in earlier trading but later recovered to 10,400 as the dollar weakened. "The rupiah is strengthening again due to profit-taking on long dollar positions," said a Jakarta-based trader.
The 14-day relative strength index (RSI) showed dollar/rupiah was overbought after the rupiah's 5 percent fall since June 5. But the rupiah remains the best performing currency in Asia, with a gain of 6 percent against the dollar so far this year.
Meanwhile, six-month dollar/rupiah NDFs dipped to 10,873, implying a 4.4 percent rupiah fall from the spot compared to 6.4 percent on Tuesday. Spreads between the NDFs and onshore forwards narrowed to 53 points from 278 points the previous day.