SINGAPORE: Most emerging Asian currencies fell on Friday and faced weekly losses as the dollar rose across a broad front after the European Central Bank's fresh monetary stimulus and ahead of key US jobs data.
The South Korean won led losses as Finance Minister Choi Kyung-hwan said the country may take action in response to the ECB's further easing.
The ECB cut interest rates to record lows on Thursday and announced plans to buy asset-backed securities and covered bonds in October.
Such easing usually helps investors raise cheap money to buy higher-yielding assets in emerging markets such as Asia.
Regional currencies, however, failed to strengthen as the ECB's move lifted the dollar against a basket of major currencies. The greenback hovered around a six-year high versus the yen.
Payrolls processing company ADP said on Thursday US companies hired workers at a steady clip in August and service sector activity accelerated to a 6-1/2-year high.
US government employment data is due later on Friday. Analysts expect the pace of job creation to have picked up slightly in August, with a rise of 225,000 jobs on nonfarm payrolls.
"There is a risk of further strength in the dollar, especially ahead of jobs data tonight," said Yuna Park, a currency and bond analyst at Dongbu Securities in Seoul.
"The Fed could become more hawkish as the ECB could fill a
liquidity gap," Park added, referring to the Federal Reserve.
Most emerging Asian currencies have fallen so far this week, led by the South Korean won and the Malaysian ringgit , which were among the best-performing emerging Asian currencies in August.
The won has lost 1.0 percent against the dollar this week on growing caution over possible intervention by the foreign exchange authorities. The ringgit has also eased 1.0 percent as offshore funds took profits.
Indonesia's rupiah has fallen 0.7 percent on concern over its current account and budget deficits. The Singapore dollar and the Thai baht have lost 0.5 percent each.
Emerging Asian currencies are likely to remain under pressure against the US dollar, but they may find some relief from the ECB easing, analysts said.
Barclays saw some relative value trade in emerging Asia and Latin America.
"We recommend longs for currencies with very high yields (INR and BRL) or very strong growth prospects (PHP), but only funded out of other EM currencies or the EUR," Barclays said in a client note, referring to the Indian rupee, the Brazilian real and the Philippine peso.
WON
The won fell as some traders said the finance ministers' comments raised possibilities of a further rate cut by the central bank.
However, a Reuters poll of economists suggested the Bank of Korea was almost certain to stand pat on policy at its September meeting after cutting its benchmark rate last month, although an underperforming economy led a number of analysts to expect another easing before year-end.
Investors covered short positions in the dollar ahead of a long holiday. South Korea's financial markets will be closed from Monday to Wednesday to mark Chusok, the Full Moon Festival.
RINGGIT
The ringgit eased as July trade data missed expectations.
Malaysia's exports in July rose merely 0.6 percent, far below a forecast 6.2 percent. The country posted a 3.64 billion ringgit trade surplus, lower than a forecast 4.0 billion.
"We are short MYR of all the Asian currencies," said Sean Yokota, head of Asia strategy for Scandinavian bank SEB in a note.
Yokota said Malaysia's monetary policy was loose and the economic outlook was not bright. Foreign investors may reduce bond holdings as higher US yields could hurt local bonds.
PHILIPPINE PESO
The peso eased but it pared losses after data showing the Philippines' core inflation hit a 17-month high in August, cementing expectations of further tightening.
"The number is enough for people to think rate hikes are inevitable," said a senior Philippine bank trader in Manila.
The trader said the peso could strengthen to 43.10 per dollar if Moody's Investors Service upgraded sovereign ratings.
Meanwhile, the central bank chief said economic fundamentals would support local financial markets.
"We could see portfolios further rebalance towards the USD," Governor Amando Tetangco said in a text message to reporters.
"However, as our own fundamental story remains intact, we don't expect significant outflows as a result of the latest ECB action."
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