SINGAPORE: Most emerging Asian currencies slid on Monday, with investors reluctant to take fresh positions ahead of the annual US Jackson Hole meeting of central bankers later this week, while the won largely shrugged off Moody's upgrade of South Korea's sovereign credit rating.
The won ended domestic trade slightly weaker, even though Moody's Investors Service raised the country's sovereign credit rating by one notch to the highest on record and on par with Japan and China.
The upgrade attracted little demand for the won from offshore funds, while some sold the local unit on rallies, dealers said.
The Malaysian ringgit underperformed as local traders reduced bullish bets, seeing resistance at 3.0920 per dollar, previous highs. The Indonesian rupiah also slid, although dealers said the central bank was spotted selling dollars at 9,510.
"Dollar/Asia should be in a holding pattern this week ahead of Friday although there may be background expectations that Bernanke may spout the prerequisite rhetoric this weekend," said Emmanuel Ng, foreign exchange strategist at OCBC Bank in Singapore, referring to Federal Reserve Chairman Ben Bernanke.
But Ng said such hopes have been priced in "fairly significantly, which leaves the market vulnerable to a snap in the dollar high, especially if this is accompanied by sustained global growth worries.
Bernanke is set to give a speech at an annual symposium in Jackson Hole, Wyoming, on Friday, which may give clues on another round of quantitative easing.
Most emerging Asian currencies rose last week, although investors on Friday scaled back expectations of strong stimulus from the Fed in the near term.
Regional units were also seen susceptible to profit taking as investors had already added bullish positions on the currencies, expecting the European Central Bank to take steps to ease the euro zone's debt crisis.
The ECB plans to hold a policy meeting on Sept. 6, while a German Constitutional Court will rule on the euro zone's permanent bailout fund on Sept. 12.
Investors are focusing on whether international lenders will agree to give Greece additional time to meet its budget targets.
Germany's Bundesbank has likened the ECB's bond-buying plans to a dangerous drug and a conservative ally of the German leader said Greece should leave the currency bloc by next year.
WON
The won closed local trade weaker despite Moody's upgrade of South Korea's sovereign credit rating to Aa3 from A1 with a stable outlook, citing strong fiscal fundamentals, economic resilience and reduced external vulnerability of the banking sector.
The move, along with exporters' month-end demand and foreigners' stock purchases, briefly helped the won turn higher.
Still, investors hesitated to chase the South Korean currency further with a lack of massive demand from offshore funds, dealers said.
Some offshore funds sold the won when it was stronger than 1,135, they added.
The upgrade's positive impact on the won is unlikely to be sustainable as slower growth, as well as possibly more rate cuts by Bank of Korea, remain as a bigger driving force for the won, dealers and analysts said.
"Today's announcement is likely to cap dollar/won rallies during risk off moves," said Jonathan Cavenagh, a senior FX strategist at Westpac in Singapore.
"We had been thinking of a move back to 1,160 but may have to temper that now. At the same time though the broader macro economic back drop for the won remains quite poor in our view and we suspect dips back to 1,130 will still be well supported."
RINGGIT
The ringgit slid as local traders sold the Malaysian currency seeing a technical resistance around 3.0920 per dollar, its strongest level on Aug 9, Aug 23 and Aug 24.
The local unit tried to clear a support at a 200-day moving average, which currently stands at 3.1088.
The ringgit also fell against the Singapore dollar, weakening past a 100-day moving average at 2.4798.
TAIWAN DOLLAR
The Taiwan dollar rose as exporters bought it for month-end settlements.
But local exporters did not rush to the island's currency, waiting for levels weaker than 29.98 versus the greenback, dealers said.
Taiwan's importers also bought US dollars for payments, while foreign financial institutions showed mixed interest, according to currency traders.
The Taiwan dollar is expected to move between 29.90 and 30.00 until the Jackson Hall meeting with small position plays, dealers said.
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