Most emerging Asian currencies rose on Wednesday as traders continued to unwind bearish bets on the US dollar's weakness, while some investors focused on better-than-expected Chinese import data. The South Korean won, the Taiwan dollar and the Indonesian rupiah hit five-week highs. The US dollar fell to a near one-month low against a basket of six major currencies.
China's imports in May eased 0.4 percent from a year earlier, the smallest decline since they turned negative in November 2014, while exports tumbled more than expected. The imports figure suggested domestic demand has picked up in the world's second-largest economy. "Markets are focusing on the stronger-than-expected import data. Better China means better Asia," said Sean Yokota, head of Asia strategy at Scandinavian bank SEB in Singapore. Yokota, however, recommended selling emerging Asian currencies on rallies, saying SEB still expected the Federal Reserve to raise interest rates in July.
Regional currencies have jumped since a surprisingly disappointing US jobs report for May hurt prospects of an imminent Fed tightening. Some Asian central banks could take advantage of the Fed staying on hold to keep their own monetary policy loose, or even ease further. South Korea's central bank meets on Thursday. The Bank of Korea is expected to keep interest rates on hold this week before cutting them next month, a Reuters poll showed.
The won rose 0.8 percent to 1,153.4 per dollar, its strongest since May 4. The South Korean currency pared some of its earlier gains amid expectations that the central bank may signal a cut in interest rates soon, as inflation remains subdued and exports are not reviving, and especially after recent weak US jobs data. Some traders also suspected the local foreign exchange authorities of intervening to stem the won's strength. The Taiwan dollar gained 0.5 percent to 32.182 per US dollar, its strongest since May 3.
Foreign investors were net buyers in local stocks in the previous six consecutive sessions, absorbing a combined net T$45.8 billion ($1.4 billion). The rupiah advanced as much as 0.5 percent to 13,200 versus the greenback, its strongest since May 3, as most government bond prices rose. The official Jakarta Interbank Spot Dollar Rate, which the central bank introduced in 2013 to manage exchange rate fluctuations, was fixed at 13,241, the strongest since then. Jakarta stocks enjoyed foreign inflows in the prior 13 straight sessions, while offshore investors added Indonesia's government bond holdings from May 27 through June 6.