The Philippines peso rose on Tuesday on expectations of an interest rate increase later this week, while its Asian peers gained on a broadly weaker dollar and a return to riskier assets, though continued intervention by regional central banks limited their advances.
Central banks of Indonesia, Malaysia, Philippines and Thailand were spotted buying dollars to slow down speedy gains in theiir currencies, dealers said. Although some Asian central banks were buying dollars to slow gains in their currencies, they were unlikely to push down their currencies as it would complicate efforts to fight inflation, dealers said.
The Philippine peso broke through a falling trend line which started from February 7 as local investors bet on a rate hike by the central bank later this week. The peso has room to strengthen more, probably 43.298 per dollar, the 61.8 pct Fibonacci retracement of its November-January fall.
The baht hit a near 11-week high against the dollar on demand from real money and as exporters with bearish dollar sentiment continued to support the local currency. The Thai currency strengthened to as firm as 30.07, the strongest since January 5.
The Bank of Thailand was spotted buying dollars, starting from 30.25 and lowering bid levels, but it is unlikely to reverse the trend, dealers said. "I don't think they will lift dollar/baht... Only way they can do is just support it and not let it go down so fast," said a Bangkok-based dealer said.
The won rose, but dollar demand from importers such as energy firms and state-run companies prevented it from strengthening past 1,120 per dollar. Few currency investors expected the won to strengthen past 1,120 yet on caution over further intervention by the foreign exchange authorities to cap its gains.
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