The Malaysian ringgit and Indonesian rupiah rose against the dollar on Thursday in step with firmer local stocks, while the Philippine peso held steady ahead of the central bank's rate decision. Asian stocks received a boost as Shanghai stocks rebounded from their steep losses in the past two weeks, weighing down the Japanese yen as market players bought back high-yielding and commodity-linked currencies.
The ringgit rose 0.4 percent to 3.529 per dollar. "The ringgit is following stocks and there has been some painful stop-loss selling with some caught long (on dollars), but dollar/ringgit got a little bounce as investors thought the 3.5250 was a bottom," says a trader in Kuala Lumpur.
The ringgit, one of the worst performing currencies in Asia along with the peso, is still down about 2 percent against the dollar so far this year. The rupiah gained a quarter of a percent to 10,110 per dollar as the 2.7 percent gain in Chinese shares lifted sentiment for riskier assets.
"Dollar-rupiah is lower. The Shanghai stock index is having a lot of impact on dollar/rupiah movements," said a Jakarta-based trader. But traders expect the rupiah to consolidate near term after rising almost 19 percent since early March. Meanwhile, three-month dollar-rupiah non-deliverable forwards fell to 10,230, implying a 1.5 percent rupiah fall from the spot compared to 1.9 percent on Wednesday. The held steady near 48.50 per dollar ahead of the central bank's rate decision, with investors torn between the dollar's broad weakness and falling local stocks.
The central bank will likely to keep interest rates unchanged later in the day, which may support the peso due to its yield advantages. "I think what we're about to see in the short term is a dollar correction due to its over-supply in the market," said a Manila trader. Three-month dollar/peso NDFs held stead at 48.91, implying a 0.9 percent peso fall from the spot compared to 1.1 percent on Wednesday.