The Philippine peso hit a two-month low on Tuesday, tracking its offshore weakness as local stocks faltered, while the Indonesian rupiah fell on month-end dollar demand. Asian stocks reversed the previous day's solid gains, led by a 5 percent slide in Shanghai stock as Chinese Premier Wen Jiabao's cautious remarks late no Monday fanned worries about the strength of the country's recovery.
The yen firmed as investors shunned high-yielding currencies, while majors took in their stride news that Federal Reserve Chief Ben Bernanke will be reappointed.
PESO: The peso lost 0.4 percent to 48.64 per dollar, a two-month low, as local stocks took a pause after a 5 percent jump in the previous day. "The peso is relatively weaker today compared to its peers, mostly playing a catch-up with the rest," said a Manila-based dealer. "The market seems to be overly long as of this point and may need to correct before a stronger test towards 48.70." Three-month dollar/peso non-deliverable forwards (NDFs) rose to 49.01, implying a 0.9 percent peso fall from the spot compared to 0.5 percent on Monday.
RUPIAH: The rupiah shed a fifth of a percent to 10,030 per dollar as local corporates bought dollars for their month-end settlements. "There has been a lot of dollar demand towards the month-end," said a Jakarta-based trader. The rupiah remains the best performer in Asia with a gain of nearly 10 percent against the dollar so far this year. Meanwhile, the three-month dollar/rupiah NDFs edged up to 10,105, implying a 1 percent rupiah fall from the spot compared to 1.1 percent on Monday.
WON: The South Korean won fell almost 0.8 percent to 1,249.4 per dollar, but many analysts remain bullish on the currency. Richard Yetsenga, currency strategist at HSBC, suggested investors should continue to go long on the won as the country's trade balance improves as part of its broad recovery.
"A V-shaped regional recovery does not imply uniform strength in regional currencies in our view. We continue to favour the won as a core long in the region," he said in a note.
"In the short-term, we are watching dollar/rupee and dollar/peso particularly closely. The dollar has been surprisingly strong against both pairs considering the strength in Indian equities and Philippines remittances," he said.