The Philippine peso firmed against a globally weaker dollar on Thursday as investors bought regional stocks, while the South Korean won held steady despite the central bank's strong signal that it will raise interest rates soon. The peso gained a quarter of a percent to 48.295 per dollar as Asian stocks firmed on Wall Street's cue and the dollar remained weaken against majors.
"Overnight developments saw positive stocks and a general sense of risk appetite," said a Manila-based trader. Meanwhile, one-month dollar/peso NDFs inched up to 48.42, implying a 0.2 percent peso fall from the spot, reversing from an implied 0.1 percent peso rise at Wednesday's close. The won hovered near 1,226 per dollar after the central bank kept rates steady and signalled it may tighten policy if house prices jump much more.
Some traders suspected Bank of Korea dollar-buying intervention to curb won's strength. "The spot has been flat all day while NDFs have tried to go a bit lower but with BOK at 1,225, the market is not ready to take them on," said a trader in Kuala Lumpur. One-month dollar/won NDFs edged up to 1,226, virtually flat from the spot.
Comments by the BOK chief Lee Seong-tae after the rate decision fuelled market expectations that the central bank may raise interest rates sooner than expected, but analysts believe it would keep a tight grip on the currency. One-month implied volatilities in the won eased further to 12.39 percent, lowest since August 2008 just before the collapse of Lehman Brothers sparked a jump in currency volatilities.