Speculators bought emerging Asian currencies on expectations for a rebound from corrections in the euro and commodities, helping the South Korean won cut earlier losses incurred when the central bank's kept rates on hold. Exporters and interbanks also chased emerging Asian currencies, such as the Thai baht, as they did not break through major support lines despite firm dollar demand to cover short positions by macro funds and model funds.
Technical indicators also suggested that the dollar has been bought most in at least two months, allowing investors to buy the regional units on dips with their longer-term outlook bright on stronger economic performance and policymakers' inflation fighting.
The 14-day dollar/won and dollar/Singapore dollar Relative Strength Index (RSI) rose to the highest since mid-March, when the regional currencies were hit by worries about the impact of Japan's earthquake and nuclear disaster. On Thursday, dollar/baht's RSI was at the highest in more than three months.
Still, market players remain cautious over further gains on persistent worries about Greece's debt problems and shaky commodities, analysts and dealers said. The won eased as model funds sold it after the central bank surprised markets by holding interest rates. Importers also sold it. Despite the unexpected rate freeze, it even failed to touch a support of 1,095 per dollar, around high of April 19.
The local unit weakened to as soft as 1,092.5 but ended domestic trade at 1,086.8. The baht rose against the dollar on exporters' demand and some interbank speculators entered short positions. On Thursday, the Thai currency weakened past 30.32, the 38.2 percent Fibonnaci retracement level of January-April strengthening trend, but ended stronger than the line.
The baht has lost 0.15 percent against the dollar so far this year, becoming the second-worst performer among emerging Asian currencies after the Indian rupee. Short-term speculators chased the ringgit as the Malaysian currency on Thursday stayed firmer than a support line of 3.0140 per dollar, the 50 percent retracement of March-April strengthening trend.