The South Korean won strengthened sharply on Thursday while trading remained light across Asia, with the Federal Reserve signalling no appetite to adjust US rates any time soon and two pivotal Asian markets - China and Japan - shut for holidays.
The won appreciated as much as 0.6 percent, its biggest intraday percentage gain in more than 10 weeks, on the back of an encouraging factory activity survey. The private survey on Thursday showed South Korea's manufacturing sector snapped five months of contraction, helped by a boost in hiring, and expanded in April. However, in a sign of continued strain, South Korea's exports in April contracted for the fifth straight month on a double-digit drop in memory chips and slowing shipments to China.
Last week, the won shed over 2 percent on weak domestic data and on Tuesday it fell to its lowest level in more than two years after bearish April readings on China manufacturing activity. Most Asian markets were closed on Wednesday for a holiday. Investors were wary of a slowdown in the South Korean economy and had stacked up bearish bets against the won, a Reuters fortnightly poll showed last week.
The Fed on Wednesday held interest rates steady, making some investors conclude the US central bank would remain patient and was not yet ready for a dovish shift. Global risk appetite would be restrained and the Asian markets would trade with a "somewhat more cautious tone" against the backdrop of the US Fed decision and comments, analysts at OCBC Bank said in a note.
The Indonesian rupiah was little changed after data showed that the April consumer inflation in Southeast Asia's largest economy picked up more than expected in April, but remained within the central bank's target range. The Indian rupee traded sideways amid muted trading across Asia as investors marked time. Japan financial markets reopen on May 7, and China's ones resume trade on May 6.
The Thai baht, the Malaysian ringgit and the Philippine peso weakened slightly on Thursday, while the Singapore dollar and Taiwan dollar rose marginally.