Most emerging Asian currencies weakened on Tuesday on views that the dollar's weakness in the last few sessions won't last long, but China's yuan hit a one-week high as state-owned banks stepped in to buy the currency for a second day. Regional units started the day stronger on weakness in the dollar, but soon reversed as the US currency recovered most of its slide against a basket of six major units.
The Indonesian rupiah led regional losses on capital outflows, while the Malaysian ringgit hovered around a 14-month low hit last week amid doubts over producer cartel will be able to agree on any meaningful output cuts at a meeting this week. South Korea's won lost most of gains after touching a near two-week peak. Investors were keeping an eye on South Korean Park Geun-hye's address later in the day amid an intensifying political scandal.
"The dollar's correction could be almost done unless we have weak US NFP data," said Qi Gao, a FX strategist with Scotiabank in Singapore, referring to nonfarm payrolls data for November due on Friday. US employers are predicted to add 175,000 jobs this month, compared to 161,000 in October, a Reuters poll showed. Gao said only a number below 150,000 would pressure the dollar.
"So, it is still better to sell Asian currencies on rallies," Gao said. The ringgit, the won, the rupiah and the Singapore dollar are seen more vulnerable, he added. The US dollar has retreated from a near 14-year peak hit last week as the recent gains were seen excessive. Still, the greenback's outlook remained bullish given the possibility of more US interest rate hikes in 2017 than initially anticipated.
The rupiah eased as foreign investors dumped Indonesian stocks over the previous 14 straight sessions, the longest selling streak since August 2015. During the period, foreign investors dumped a combined net 9.5 trillion rupiah ($700.9 million) worth of local equities. Indonesia's government bonds also saw an outflows of 20.3 trillion rupiah during the first 25 days of the month, finance ministry data showed.
The won earlier gained as much as 0.4 percent to 1,166.3 per dollar, its strongest since November 16, on exporters' demand for month-end settlements. Foreign investors also bought a net 159.8 billion won ($136.6 million) worth of Seoul shares by mid-afternoon, set to extend their buying spree in the main stock exchange to a three consecutive session. The South Korean currency pared most of earlier gains as analysts saw a chart resistance area around 1,164.0-1,165.0. At 1,164.7 per dollar, it has the 38.2 percent Fibonacci retracement of its weakness since Trump won the US Presidential election on November 8. Another resistance line stands at 1,164.0, the 23.6 percent retracement level of its depreciation from September through November.