The high-yielding Indonesian rupiah fell on Monday in tandem with the euro on the back of growing debt worries in the eurozone, while the South Korean won's protracted weakness pushed up its volatilities. The euro and growth-linked currencies also fell as investors unwound risky trades, shrugging off assurance from European officials at a Group of Seven meeting at the weekend.
At the G7 meeting of finance ministers and central bank governors, no new statement on currencies was issued, but support was rising for a levy on banks that could pay for global governments' rescue of the financial system. European ministers told their G7 peers on Saturday they would make sure Greece sticks to its budget-cutting plan, but markets are sceptical.
WON The won shed 0.4 percent to 1,174.3 per dollar, taking its losses in the past month to 4.6 percent. On the chart, both the MACD and slow stochastics still point to further weakness in the currency, and 1,190 looks in sight. The won dipped below the 100-day moving average last week.
Investors bid up implied volatilities in the won as the spot weakened. One-month vols briefly hit 16 percent late on Friday - highest since late October 2009 - before easing back to 15.5 percent on Monday. But traders said turnover was thin because few in the market are willing to short vols as they anticipate further won weakness. "The vols are higher because people mark them higher, but no one wants to sell due to uncertainties of the market," said an options trader in Singapore.
RUPIAH Indonesian rupiah fell as much as 0.6 percent to 9,435 to the dollar as risk appetite remains subdued. "The rupiah is rangebound at the moment with market lacking any momentum," said a Jakarta-based trader, who expected further rupiah weakness if it fails to hold 9,450 - a near term support.
The rupiah has fallen about 3 percent in the past month despite suspected central bank intervention to limit its decline. "There is no flow from the outside at the moment," said a second trader. Traders said foreigners had sold local stocks and bonds in recent sessions. Meanwhile, one-month dollar/rupiah NDFs eased slightly to 9,455 from Friday's close at 9,520.
BAHT The Thai baht edged up to 33.1 per dollar in thin trade, taking its cue from a firmer yen. "The lingering debt problems in Greece, Spain and Portugal will further batter the euro for a while and is particularly reflected in euro/yen.
Locally, Thai stocks will continue coming under selling pressure this week," said a Bangkok-based trader. A second dealer said Thai political uncertainty in the run-up to a February 26 court ruling on former Prime Minister Thaksin Shinawatra's assets was a potential negative market factor for the baht in the next few weeks.