Most emerging Asian currencies slid on Wednesday as the dollar broadly rallied with solid US housing data reviving expectations that the Federal Reserve would raise interest rates later this year. South Korea's won fell as the yen weakened past 120 per dollar to hit a two-month low, underscoring caution over possible intervention by foreign exchange authorities to support growth in Asia's fourth-largest economy.
The Malaysian ringgit touched a one-week low as overnight slides in oil prices increased concerns over their impact on Malaysia's current and fiscal accounts. The country is a net oil exporter. Indonesia's rupiah declined on corporate dollar demand. The dollar rose to a two-week high against a basket of six major currencies. US housing starts jumped to their highest level in nearly 7-1/2 years in April and building permits soared, indicating the world's biggest economy may regain momentum after a dismal first quarter.
The greenback found further support from a weaker euro on expectations that the European Central Bank would increase its bond-buying programme. "Asian currencies had failed to partake significantly in the recent dollar retreat from late April and the regional units may continue to remain vulnerable if the USD continues to reassert itself again multi-session," said Emmanuel Ng, a foreign exchange strategist with OCBC Bank, in a client note.
The won fell 0.7 percent to 1,095.4 per dollar as of 0520 GMT. It slumped on the broad dollar strength, while it recovered some slides on dollar demand from exporters for settlements. Foreign investors also continued to buy Seoul shares, limiting the won's downside. The South Korean currency has a chart support area between 1,100 per dollar and 1,102, analysts said, with the 50.0 percent Fibonacci retracement at 1,101.6 of its appreciation from March to April.
The ringgit lost 0.6 percent to 3.6120 per dollar, its weakest since May 12, tracking its overnight slide in non-deliverable forwards markets. Traders covered short positions in spot ringgit around 3.6100 per dollar as oil prices rebounded on Wednesday in Asia. It has a chart support at 3.6123, the 76.4 percent Fibonacci retracement of its appreciation last week. The rupiah slid on dollar demand from local importers for payments. The currency pared some of its losses as the central bank was spotted intervening from the session low of 13,180 per dollar to support the worst-performing Asian currency this year, traders said. "The 13,200 level will be defended by BI," said a Jakarta-based currency trader, referring to Bank Indonesia. The official Jakarta Interbank Spot Dollar Rate, which the central bank introduced in 2013 to manage exchange rate fluctuations, was fixed at 13,169 rupiah per dollar, firmer than the previous 13,183.