The South Korean won led emerging Asian currencies higher on Thursday, helped by a sharp decline in oil prices that led to increased foreign flows into regional equity markets. "Central banks will remain hawkish and lower oil price represent better risk appetite, so overall they should still be supportive for Asian FX," said Frances Cheung, a strategist at Credit Agricole CIB in Hong Kong.
The won's gains on the day were a bit of catch up with other emerging Asian currencies that have benefited from perceptions of policy credibility, such as the Indonesian rupiah. Central banks in Malaysia, Indonesia and Singapore were spotted buying dollars to check the speed of gains in their currencies, dealers said. Dollar/won lost 0.8 percent to 1,119.3, the lowest since February 21 as offshore funds, including macro funds, hedge funds and model funds sold the dollar.
But importers bought dollars for settlements around 1,120, limiting falls in dollar/won. Dollar/Singapore dollar hit a record low despite dollar-buying intervention was spotted. Investors remain confident the MAS will allow further strength in Singapore dollar and comfortable with short positions in the pair.
Dollar/Singapore dollar stayed heavy, despite agent names sitting at the base at 1.2680 level. Traders are targeting the 1.2500 objective. Dollar/Taiwan dollar fell on exporters' sales for settlements but trading was thin before rate decision of the European Central Bank and US job data later in the day.
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