Asian currencies were weaker on Thursday as investors cut bullish positions ahead of US jobs data, even though the top economies of the region, China and South Korea, reported positive data after a year battling global headwinds. Investors had already priced in signs of a turnaround in the economies of the region and saw little scope for a further rise in the regional currencies, analysts said.
If anything, traders expected local authorities to intervene to ensure that local units did not strengthen further and hurt their exports. The Indonesian rupiah led the slide among Asian peers, weighed down also by higher-than-expected inflation in October, which triggered selling of bonds by foreign investors.
The South Korean won dipped as investors took profits from the best performing emerging Asian currency in October. Some dealers said foreign exchange authorities may have bought dollars to keep the won down. South Korea earlier posted the first annual rise in exports in four months in October, adding to hopes for a turnaround after a year-long slump in global trade.
China's economy, the motor of global growth in recent years, also appears to have gathered pace in October after slowing to its weakest pace in more than three years in the third quarter. "Today's data is not that bad, but such recovery has been priced. The recent optimism on China economy has already helped Asian currencies benefit from policy easing by major countries," said Jeong My-young, Samsung Futures' research head in Seoul.
The Hong Kong Monetary Authority stepped into the currency market again by selling 2.3 billion Hong Kong dollar ($296.77 million) as the local currency repeatedly hit the top end of its trading range. For the month, most emerging Asian currencies rose as the United States and China showed signs of improvements. Regional countries heavily rely on exports to the world's top two economies.
The won rose 1.9 percent against the dollar in October and the Philippine peso was the No 2 performer with a 1.3 percent gain, according to Thomson Reuters data. The won eased as the South Korean foreign exchange authorities were suspected of buying dollars to keep the local unit weaker than 1,090 per dollar, dealers said.
State-run importers purchased dollars and domestic interbank players covered dollar-short positions, dealers added. But the South Korean currency found some relief from exporters' demand for settlements. Investors were also waiting for chances to buy the won on dips, according to dealers. "Everything is up to intervention, but many were lined up to sell dollar/won on rallies," said a senior foreign bank dealer in Seoul.
The rupiah slid as state-run banks bought dollars on behalf of local corporates, dealers said. Earlier, the Indonesian currency had found some relief on demand from foreign banks linked to bond inflows, dealers said. But foreign investors sold bonds after data showed the country's inflation picked up in October to 4.61 percent from a year ago, slightly higher than expected.