The Philippine peso turned higher on Monday after Moody's upgraded the country's sovereign ratings, while the South Korean won and the Taiwan dollar gained on month-end demand from exporters amid subdued trading. The peso initially weakened to 41.275 per dollar during morning trade, but it reversed direction in the afternoon session after the rating agency's move.
Moody's Investors Service upgraded the Philippines' foreign and local currency long-term bond ratings by one notch to Ba1 from Ba2, citing the country's improved economic performance and continued fiscal revenue buoyancy. "At the moment, the market is looking for a catalyst to push the peso. Dollar/peso would be vulnerable to further downside with lack of corporate demand," said a European bank dealer in Manila.
The dealer expected the central bank to intervene to stem the peso's strength, but added: "one thing is clear that any upside (in dollar/peso) will be heavy." The peso has gained 6.5 percent against the dollar so far this year, becoming the best performing emerging Asian currency, Thomson Reuters data showed.
That came even as the central bank has been spotted slowing down its appreciation along with intervention by other central banks, which has curbed the peso's upside. "Emerging Asian currencies have lost much of their appreciation momentum on sustained worries about intervention. They also technically appeared to have risen too much, so more investors may want to take profits," said Yuna Park, a currency and bond analyst at Dongbu Securities in Seoul.
Investors were not confident enough about the global economic recovery despite signs of stable US growth and due to uncertainty over the euro zone's debt crisis. Traders await Spain's request for a bailout, which would initiate the European Central Bank's bond-buying programme and could push the euro out of its recent range.
Investors also kept a wary eye on Greece, after the country's opposition leader said his party would vote against an austerity package expected to go before parliament this week. The won hit 1,094.6 per dollar, its strongest since October 28 last year on demand from exporters for month-end settlements. But traders took profit on caution over possible intervention by the foreign exchange authorities to slow down the won's strength. Trading was also thin.
President Lee Myung-bak said in a speech that South Korea's comparative economic strength has been pushing the local currency higher. This appreciation "makes difficulties for exporters," he said. "The won may see short-term resistance around mid-1,090 once exporters' month-end deals are cleared this week," said a senior foreign bank dealer in Seoul.
The Taiwan dollar rose slightly on exporters' demand for settlements, while importers' bids for greenbacks limited the local unit's upside. Interbank speculators hesitated to build up aggressive bets either way as overseas markets, especially in New York, are unlikely to provide market-moving factors due to Hurricane Sandy.
The storm is expected to slam into the US East Coast on Monday night. Market participants in the New York area see a light trading day on Monday - and possibly through Tuesday - with some US markets closed, as some offices in lower Manhattan's Financial District are in an evacuation zone. The ringgit eased as traders covered dollar-short positions on a weaker euro, dealers said. The Malaysian currency came under more pressure from some dollar demand from importers, they added.