SINGAPORE: Most emerging Asian currencies softened on Thursday after China's central bank cut the reserve requirement ratio, the latest key easing move in the region to support growth and combat deflationary pressure.
Regional currencies came under further pressure as risk sentiment soured after the European Central Bank said it would no longer accept Greek bonds as collateral for its liquidity operation, dampening hopes for a resolution of Greece's debt woes.
The Chinese yuan slid after the central bank late on Wednesday made a system-wide cut to bank reserve requirements, the first time in over two years.
South Korea's won fell as foreign investors sold local stocks and bond futures amid risk aversion. Malaysia's ringgit eased as oil prices renewed their slide.
"Emerging countries continue to ease (monetary policy) and Asian currencies are competitively depreciating," said Yuna Park, a currency and bond analyst at Dongbu Securities in Seoul.
"In addition, risks from Europe are never ending," Park said.
Growing expectations that policy easing will spread across Asia hurt sentiment towards regional currencies over the past two weeks, with short positions on China's yuan at a near 10-month high, a Reuters poll showed.
WON
The won slid as traders cut long positions in the South Korean unit which they had built up expectations of demand from exporters for settlements.
Seoul shares ended down 0.5 percent, underperforming MSCI's broadest index of Asia-Pacific shares outside Japan.
RINGGIT
The ringgit initially underperformed Asian peers as plunging oil prices renewed concerns over their impact on the country's current account surplus and fiscal deficit.
The currency, however, pared some earlier losses as exports in December rose 2.7 percent from a year earlier, more than expected.
Government bond prices rose with the 10-year yield down to as low as 3.759 percent, its lowest since November 2013.
TAIWAN DOLLAR
The Taiwan dollar rose as continuous foreign stock inflows helped it ignore data showing consumer and wholesale prices in January posted their largest fall in more than five years.
Economists said there was no danger of the island slipping into deflation as the drop was mainly due to the plunge in world oil prices, rather than a broad-based slump in demand.
Foreign investors are expected to buy local shares despite a slide in the main index, currency traders said. Foreigners purchased a combined net T$22.3 billion ($709.3 million) of stocks in the first three days of the month, according to Taiwan Stock Exchange data.
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