Most emerging Asian currencies eased on Tuesday, as traders booked profits on expectations of further weakness in the Chinese yuan and an extended slide in oil prices. Regional currencies also tracked weakness in the New Zealand dollar and the Australian dollar on views of interest rate cuts in the Antipodeans countries. The yuan edged up with state-run banks spotted intervening to support the currency on behalf of the central bank.
On Monday, the renminbi weakened past a psychologically important 6.7 per dollar level for the first time in more than five years and market watchers expect more weakness ahead given the slowdown in the world's second-largest economy. That dragged the Singapore dollar to a one-week low and also hurt the South Korean won.
The Malaysian ringgit eased as falling crude prices underscored concerns over the country's oil and gas revenues. "Emerging Asian currencies saw some profit-taking on a weak yuan and the Australian dollar today," said Yuna Park, currency and bond analyst at Dongbu Securities in Seoul. "Still, continuous capital inflows to the region will help stabilise those currencies in the second half."
Most emerging Asian currencies have been supported as investors sought higher yields in the region on expectations that global central banks may ease monetary policies to support their economies in the wake of Britain's vote to leave the European Union last month. The ringgit eased as much as 0.4 percent to 3.9915 per dollar, its weakest since July 13, as oil prices shed more than 1 percent on oversupply worries. The Malaysian currency pared some of its earlier losses as most government debt prices, especially long tenor bonds, rose.
The country will sell 3.5 billion ringgit ($878 million) of Islamic government bonds maturing in August 2021, the central bank said earlier. The tender for the bonds closes on Thursday. The won slid as offshore funds dumped the currency on the yuan's weakness. The South Korean currency pared most of earlier losses as foreign investors kept buying Seoul shares. Exporters were also lined up to buy the currency around 1,140 per dollar for settlements.