SINGAPORE: The South Korean won turned higher on Tuesday as demand from offshore funds and exporters prompted short squeezes, and its gain helped most emerging Asian currencies strengthen in spite of worries about global growth hurting risk appetites.
However, the Philippine peso slid to a near six-month low as the growth pace for remittance inflows slowed and as offshore funds offered to buy the currency.
Initially, the won, along with most other regional units, slid as investors cut risky assets on concerns over a tepid global recovery after softer economic data from the world's top biggest markets - the United States and China.
Further denting interest in risk assets were the detonation of two bombs in Boston, which killed three people and wounded more than 100.
But the South Korean currency turned higher as exporters such as shipbuilders chased it for settlements and offshore funds joined those bids.
Interbank speculators covered short positions in this year's worst performing emerging Asian currency in order to cut losses. This allowed the won to end local trade up 0.5 percent at 1,115.2 per dollar.
Technically, the won is seen as having room to appreciate more to 1,110.6, the 38.2 Fibonacci retracement of its depreciation between January and April, analysts said.
The won's Tuesday appreciation helped other Asian currencies rebound or recover some of their initial losses.
Some analysts say worries about the global outlook have been overstated in the wake of tepid US data and China's weaker-than-expected first quarter growth. They believe that emerging Asian currencies may be firmer in the second half.
"The US and China data are not bad enough to spur such concerns. Yesterday's China's growth indicated that the economy is expanding without bubbles and the US economy will gather steam from the third quarter," said Yuna Park, a currency and bond analyst at Dongbu Securities in Seoul.
"So, emerging Asian currencies may benefit from that," Park added.
SINGAPORE DOLLAR
The Singapore dollar gained as investors used the currency as a proxy for the Chinese yuan.
Earlier, the yuan hit a record high as China's central bank fixed the mid-point of the trading band at a historical peak for a third consecutive session.
RINGGIT
The ringgit edged lower as interbank speculators cut bullish bets amid global risk aversion.
The Malaysian currency could see more corrections if risk sentiment sours further, but traders were looking to buy it on dips due to expectations of more inflows.
State-owned strategic development firm 1Malaysia Development Bhd (1MDB) and its Abu Dhabi partner Aabar Investments PJSC (Aabar) have raised $3 billion through private placements to invest in projects such as energy and strategic real estate.
"The Malaysia-Abu Dhabi news is another inflow source for the ringgit," said a senior Malaysian bank trader in Kuala Lumpur.
"If risk aversion abates, then we short the dollar/ringgit again," said the trader.
The ringgit has benefited from bond inflows since Prime Minister Najib Razak announced a general election, which is scheduled for May 5. Opinion polls say Najib's coalition is expected to win a narrow victory.
Investors suffered from stop-loss selling after the peso started the day weaker than its 200-day moving average, currently near 41.30, traders said. The peso had been firmer than the average since June last year.
The peso recovered some of its initial losses to close at 41.380, compared with Monday's close of 41.235, but it still underperformed most Asian peers.
"Sentiment still remains fragile," said a senior Philippine bank trader in Manila, adding the peso may head to 41.850 per dollar in the medium term.
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