Emerging Asian currencies fell on Friday as investors scaled back expectations of a strong stimulus from the US Federal Reserve and booked profits from gains made this week. The South Korean won declined the most as traders increased their dollar holdings, with foreigners turning to net sellers in the country's main stock market.
The Singapore dollar eased as growth concerns returned to the fore after the city-state reported weak industrial production in July. Talk of a possible intervention by the central bank to slow down the currency's appreciation dragged it down further. The Thai baht and the Malaysian ringgit were both weaker as interbank speculators booked profits from gains made earlier in the week. Investors are keeping an eye on the annual informal conference of central bankers and economists at Jackson Hole, Wyoming at the end of this month when Fed Chairman Ben Bernanke will give a speech.
The ringgit was the best performer for the week with a 0.9 percent gain against the dollar, Thomson Reuters data showed. Investors chased the Malaysian currency versus the Singapore dollar with the city-state's unit under pressure from intervention talk, dealers said. The ringgit on Friday hit 2.4754 to the neighbouring local unit, its strongest since June 18.
Malaysian exporters and interbank speculators also bought the ringgit, according to traders. The baht has risen 0.8 percent to the greenback so far this week and the Indian rupee has gained 0.6 percent, according to Thomson Reuters data. The won slid as interbank speculators added dollar positions, scaling back expectations of the Fed's more stimulus.
A foreign bank dealer in Seoul expects the local unit to find more support next week as more exporters are likely to buy the won for month-end settlements, saying "the won may see 1,125 (per dollar)". The Singapore dollar eased amid market talk that agent banks of Monetary Authority of Singapore placed US dollar bids at 1.2460 per dollar.
The city-state's currency came under more pressure after July industrial production was much weaker than expected. Singapore July industrial production rose 1.9 percent from a year earlier, well below market forecast of a 6.7 percent growth, data showed.
The baht weakened past a 200-day moving average, which currently stands at 31.219 per dollar, in thin trading as traders covered short dollar positions. On Thursday, the Thai currency hit 31.150, its strongest since May 11, strengthening past the average. But a Thai bank dealer said the baht would find support from bond inflows.
The ringgit barely changed, although local traders took profits from the Malaysian currency before a weekend. But interbank speculators hesitated to sell the Malaysian unit further as the euro held steady near seven-week highs against the dollar. If the euro extends rise above 1.2600 per dollar, the ringgit would head to 3.0800, the dealer said.