Renewed hopes for a US budget deal supported most emerging Asian currencies, but regional units faced a roadblock of intervention by foreign exchange authorities acting to stem appreciation. The South Korean won rose on month-end demand from exporters, but its upside was capped with the foreign exchange authorities suspected of buying dollars.
The Taiwan dollar gained on similar corporate bids and inflows from foreign financial institutions, but domestic importers bought US dollars amid caution over intervention. The Philippine peso turned weaker on market talk of central bank dollar demand and investor profit-taking.
"Regional authorities have no have choice but to intervene as the liquidity created by global easing is seen focusing on Asia, not on emerging markets as a whole," said Jeong My-young, Samsung Futures' research head in Seoul. The won gained on some month-end demand from exporters, while foreign exchange authorities were suspected of acting to limiting its upside, dealers said.
"Exporters and the authorities stood opposite to each other. We will continue to see such confrontation for the time being," said a senior foreign bank dealer in Seoul. The Philippine peso turned weaker as the central bank was spotted intervening and interbank speculators squared bullish bets before a long weekend. Earlier, the peso strengthened to 40.85 per dollar. Financial markets in Philippines will be closed on Friday for a holiday.
The peso is seen staying under pressure for a short term as investors still appeared to hold long positions in the unit, some dealers said. Short-term peso forwards were quoted at a discount. A foreign bank dealer in Manila expected the peso to weaken to 41.00. The ringgit advanced in subdued trading on renewed hopes for the US budget negotiations, but some more-cautious local investors took profits, capping the Malaysian currency's upside. The Taiwan dollar rose on exporters' demand for month-end settlements and on buying by foreign financial institutions.