Most emerging Asian currencies eased on Tuesday in the face of broad US dollar strength, with China's yuan hitting its weakest in more than six months. The yuan fell as much as 0.2 percent to 6.2362 per dollar, its weakest since June, and almost touched its 2-percent trading limit for the first time, on growing bearish sentiment towards the currency. South Korea's won eased on caution over possible intervention by the foreign exchange authorities to check its strength against the yen, traders said.
The Malaysian ringgit hovered near a five-year low as the dollar hit a 29-month high to the euro on worries that a snap election in Greece may derail the country's international bailout. The political uncertainty hurt risk appetite, dragging Asia-Pacific stocks outside Japan lower. "The dollar is a king. The game is to be long the USD," said a senior Malaysian bank trader in Kuala Lumpur, adding emerging Asian currencies are weaken further next year.
Regional currencies have lost ground so far this year partially due to expectations that the Federal Reserve may raise interest rates in 2015, prompting investors to withdraw funds from emerging markets and channel them back to the United States. Trading was thin across Asia ahead of the New Year's holiday and as many investors have already closed out their positions for 2014. The won slid as investors were wary of possible intervention after the currency on Monday hit 9.0944 against the yen, its strongest since March 2008.
South Korea and Japan compete in overseas markets for sales of cars, ships and electronics. The won pared some of earlier losses on demand from exporters for year-end settlements. South Korea's current account surplus rose to a seasonally adjusted $9.73 billion in November, its highest in seven months, central bank data showed earlier. Daewoo Shipbuilding & Marine Engineering Co Ltd also said it has won a combined 2.2 trillion won ($2.0 billion) orders to build ships, prompting expectations of more demand for the won.