The Indonesian rupiah hit a near six-week high on Monday, leading gains among emerging Asian currencies, as investors hunted for higher yields in the region after the Bank of Japan adopted negative interest rates. South Korea's won, however, slid as exports in January suffered their worst fall since the depth of the global financial crisis in 2009 due to a collapse in sales to China. The weak export performance was seen keeping pressure on the Korean central bank to provide more monetary stimulus.
The BoJ's bold easing lifted global bonds and boosted carry trades into emerging Asia, though inflows into some regional currencies are likely to be limited by the weaker yen, analysts said. "At present, the positive risk view is benefiting Asian currencies," said Khoon Goh, senior FX strategist for ANZ in Singapore, adding the higher-yielding rupiah and India's rupee may outperform the region.
"But the weakening in the yen is a negative from a currency competitiveness point of view. Further yen declines will eventually weigh, particularly on KRW and TWD," Goh said, referring to the won and the Taiwan dollar. South Korea's exporters including automakers competing fiercely with Japanese rivals. Taiwan competes against South Korea in export markets for key products, such as semiconductors.
Investors remained concerned over sluggish global growth. China's manufacturing activity contracted at its fastest pace in almost 3-1/2-years in January, an official survey showed, indicating the world's second-largest economy keeps losing momentum and needs additional stimulus.
The rupiah jumped 1.5 percent to 13,570 per dollar, its strongest since December 22. Most government bond prices rose with 10-year yields down to 8.159 percent, the lowest since May 29. The Indonesian currency may strengthen to 13,552 rupiah per dollar, the 61.8 percent Fibonacci retracement of its depreciation from October 2015 to December, if it ends the day firmer than a 200-day moving average at 13,672, analysts said.
The rupiah had been closing daily sessions weaker than the average since September 2014. The won slid to as weak as 1,210.8 per dollar as data showed South Korea's exports in January slumped a worse-than-expected 18.5 percent from a year earlier, the largest drop since August 2009.
The South Korean currency pared some of earlier losses as the foreign exchange authorities were spotted intervening to stem further losses in the worst-performing Asian currency so far this year, traders said. "Dollar offers were pretty solid around 1,209. The authorities appeared to strongly push down when it broke 1,210," said a foreign bank trader in Seoul. In addition, exporters chased the won for settlements on dips before the Lunar New Year's holidays early next week.