The Malaysian ringgit and the Philippine peso slid on Thursday as interbank speculators trimmed exposure to emerging Asian currencies on renewed concerns over debt contagion in Europe and political gridlock in Washington on how to cut the deficit. But with fears of a looming US debt default or credit rating downgrade continuing to weigh on the dollar, market watchers said the longer-term bullish trend for emerging Asian currencies appeared to be still intact.
Emerging Asian currencies have enjoyed inflows amid the region's solid economic growth and policymakers' anti-inflation stance. The ringgit shed 0.4 percent against the dollar on dollar-short covering amid a weaker euro. On Wednesday, the Malaysian currency hit its strongest since late September 1997 as the central bank was not spotted buying dollars.
The gain caused the 14-day dollar/ringgit Relative Strength Index (RSI) to fall below the 30 threshold, indicating the pair was in oversold territory. With the Thursday's dollar-short cover, the RSI rebounded to 33.47. The Philippine peso fell as interbank speculators covered dollar-short positions. The Philippine currency may correct further as the 14-day dollar/peso RSI was still below the 30 level, dealers said. But that would not impair its longer-term upward, they added. The won pared early losses as exporters bought the South Korean currency for end-month settlements.
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