The Indian rupee and Indonesian rupiah were Asia's biggest losers on Monday as a broad bout of profit-taking helped the US dollar recover part of more than a week-long downtrend. Meanwhile, spreads remained wide between non-deliverable forwards (NDFs) on most regionals and the onshore forward markets, partly as a result of flows, but also an indication that offshore investors were more bullish on Asian currencies.
RINGGIT Malaysian ringgit onshore markets were pricing in a bigger depreciation than the offshore NDFs. The ringgit was quoted at 3.536 per dollar in one-year onshore forwards, a nearly 1 percent fall from spot 3.5010. One-year NDFs were quoted at 3.5210 per dollar. The onshore-offshore implied FX yield difference was 13 basis points, a spread not been seen since the end of April.
"There is hardly any inflow in the debt and equity market to justify a firmer ringgit," said Suresh Kumar Ramanathan, a strategist at CIMB. "The market thinks this rate spread - Malaysia versus US - is going to be large for a longer period than expected, so the forwards need to compensate via a weaker ringgit.
And there have been a lot more market players assuming the ringgit's ability to break below 3.45 is going to be rather difficult." Meanwhile the offshore market was bullish, betting on a V-shaped global recovery, he said.
WON The South Korean won fell as investors covered dollar short positions and on weaker local shares. Demand for dollars from importers was also higher. The won was quoted at 1,224 per dollar, down 0.3 percent from Friday's domestic close of 1,221.8. "The won appeared to experience a correction. It is set for further weakness if offshore players cover short-positions further," said a trader in Seoul.