The South Korean won and the Thai baht rose alongside their regional peers on Tuesday, sparking a wave of dollar-buying intervention by authorities to temper their strength. The dollar teetered back towards a 15-year low against the yen hit last week, pressured by a further decline in US Treasury yields and reviving debate over whether Japanese authorities will take any measures to curb the yen's rally.
Indonesian markets were shut for a holiday. The South Korean won jumped 1 percent to 1,174.7 per dollar, breaking through a resistance line around 1,180 per dollar and prompting the authorities to intervene. "Exporters' demand around early-1,180 levels forced investors to clear dollar-long positions, which they had built up on expectations for the won's falls," said a foreign bank dealer.
Another dealer said market players seemed to have more dollar positions to clear. The Philippine peso gained half of a percent to 45.17 per dollar as offshore investors joined a rush to snap up local bonds as they searched for higher returns. "There is good demand from both onshore and offshore, especially offshore investors, as many are anticipating peso appreciation in the medium term," said a bond dealer in Manila. Traders expect the peso, a laggard in the region with a 2 percent gain against the dollar so far this year, to appreciate at a faster clip towards the year-end due to strong remittance inflows from Filipinos working overseas.
Thai baht gained 0.4 percent to 31.70 per dollar, heading closer to a 28-month high with exporters leading the dollar sell-off. "We see a whole lot of people selling USD/THB, especially by exporters. The baht rally may last a bit longer, at least until exporters trim off their dollar positions," a Bangkok-based trader said.
The baht has appreciated 1.54 percent against the dollar in the past month and gained 5.0 percent this year. The Singapore dollar gained 0.4 percent to 1.3557 per US dollar, breaking the 20-day moving average near 1.36. But the Singapore dollar is likely to be overbought if it reaches that level and a near-term correction may follow, as the bearish MACD indicates, charts show. The Singapore dollar has gained 3 percent since the end of June, propelled by the country's solid economic data. Such a correction may take the currency to 1.37-1.38, although its longer term strength against USD remains intact.