SINGAPORE: Most emerging Asian currencies eased on Wednesday as investors trimmed risky assets after news of weak corporate earnings and higher Spanish borrowing costs, although regional units recovered much of losses after encouraging China's manufacturing survey.
The Malaysian ringgit tried to weaken past a chart support and the Philippine peso eased as interbank speculators added dollar holdings.
Both currencies and their peers including the South Korean won were off their session lows after the China HSBC Flash Manufacturing Purchasing Managers Index (PMI) rose to a three-month high of 49.1, reducing worries of a hard landing in the world's second-largest economy.
The survey, as well as Australia's higher-than-expected inflation data, powered the Australian dollar and the Singapore dollar. Asian shares trimmed their initial slides.
"The Flash PMI confirmed again that the China economy is bottoming out. If China shows more improvement, Asian currencies will stay firm in the medium and longer term," said Yuna Park, a currency and bond analyst at Dongbu Securities in Seoul.
"But in the short-term, Asian currencies may see some corrections on rising risk-off sentiment due to Spain and intervention possibilities. Their valuations appeared a bit too high," Park added.
Other analysts and dealers said emerging Asian currencies are unlikely to extend gains on sustained worries that a sluggish global economy may keep biting into worldwide corporate performance.
Concerns over the Spanish debt problems also persisted with the country's bond yields up in the wake of credit rating downgrade of five Spain's regions by Moody's Investors Service.
"There remains a sufficient layer of uncertainty to keep dollar/Asia supported, given also that some Asian currencies such as the won have risen fairly significantly already," said Emmanuel Ng, a foreign exchange strategist at OCBC Bank in Singapore, referring to worries about Spain and global growth.
On Tuesday, the won hit a near one-year high against the dollar and touched its strongest in more than six months versus the yen.
Investors also stayed cautious over possible intervention by Asian foreign exchange authorities to stem their currency's appreciation.
Hong Kong's central bank stepped into the currency market twice on Tuesday as the local currency hit the top end of its trading range.
RINGGIT
The ringgit hovered near the kijun line at 3.0570 per dollar on the daily Ichimoku chart, which the currency had been closing stronger than since late July.
Earlier, the Malaysian currency weakened to 3.0645, but recovered some of the loss after the encouraging China Flash PMI.
Still, investors hesitated to add more bullish bets on the local currency as risk appetite weakened, dealers said.
"Markets were digesting the China PMI, but overnight news such as weak US corporate earnings was pretty bearish for risk," said a Malaysian bank dealer in Kuala Lumpur.
"It may be still prudent to hold long dollar positions. I will not short dollar/ringgit here," he added.
PHILIPPINE PESO
The Philippine peso eased in thin trading on weaker regional stocks, although it cut some of initial slide after the China flash PMI.
Investors were reluctant to build up aggressive positions before the central bank's policy meeting on Thursday when it is expected to cut its policy interest rate, but some dealers were looking to buy the peso on dips.
"With the better China flash PMI data, we may have seen the top of dollar/peso for now. Traders saw its uptick as a chance to add or reinstate dollar-short positions," said a European bank dealer in Manila.
The dealer expected the peso to head to 41.30 per dollar, although the level is unlikely to be breached due to possible intervention.
WON
The won turned higher as exporters' demand for settlements and economic indicators from China and Australia forced investors to reduce dollar holdings. Offshore funds also joined bids for the local unit.
The South Korean currency started local trade weaker at 1,106.0 per dollar with risk sentiment hurt by dismal US earnings.
"Few wanted to hold dollar-long positions during the local trade. It looks better to buy the won on dips, given that exporters are waiting to dump dollars," said a foreign bank dealer in Seoul.
TAIWAN DOLLAR
The Taiwan dollar gained slightly on the main exchange in subdued trading from Tuesday's close, which dealers said the central bank weakened at the last minute of trading as usual.
The island's currency, however, edged weaker on the smaller market as disappointing US corporate earnings dented risk appetite.
On the smaller market, the Taiwan dollar was at 29.274 versus the greenback, slightly weaker than the previous close of 29.271.
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