SINGAPORE; Most emerging Asian currencies rose on Wednesday as Japan's central bank joined other major policymakers in launching fresh stimulus to shore up growth, bolstering risk sentiment and hopes for more capital inflows to the region.
The South Korean won and the Singapore dollar hit their highest levels versus the yen in about four and a half months after the Bank of Japan (BOJ) eased monetary policy by stepping up asset purchases by 10 trillion yen ($127.21 billion), double the usual amount.
The move invigorated emerging Asian currencies, most of which started the day slightly weaker against the dollar on worries about Spain's apparent reluctance to apply for financial aid. Asian shares also rebounded from initial losses.
"We got another excuse to get bullish here," said Andy Ji, Asian currency strategist for Commonwealth Bank of Australia in Singapore.
"There is already enough liquidity around and all it takes for those to come to the region is some feel-good stories," said Ji, picking up the won as the best choice for investors.
Emerging Asian currencies have appreciated so far this month as the Federal Reserve introduced a third round of quantitative easing and the European Central Bank launched a fresh bond-buying programme to ease the three-year old debt crisis.
Still, Asian policymakers may not necessarily welcome those measures as they risk inviting hot money into their economies, and stronger regional currencies are likely to hurt export competitiveness at a time when global growth is faltering.
Business sentiment among Asia's top companies fell for the second straight quarter, dragged down by export-orientated economies such as China and Japan, while domestic spending helped boost Southeast Asia's outlook, according to the latest Thomson Reuters/INSEAD Asia Business Sentiment Survey published earlier.
Some authorities such as central banks of Philippines and Taiwan have been recently spotted intervening to curb appreciation of their currencies, dealers said. Investors remained wary of similar moves by central banks in the region.
Investors are also awaiting the latest data on Chinese manufacturing, with the HSBC flash purchasing managers' index (PMI) due on Thursday.
PHILIPPINE PESO
The Philippine peso gained on demand from medium-term funds and macro accounts, and extended strength to hit a session high of 41.57 per dollar.
But the peso's gains were limited as domestic interbank speculators took the gain as chances to book profits, they added.
With traders seen still holding short dollar positions to cover, the peso is unlikely to extend gains here, a foreign bank dealer in Manila said.
WON
The won started local trade weaker against the dollar, but turned firmer after the BOJ eased policy.
The South Korean currency hit 14.0644 versus the yen, its strongest since May 3.
The strength further boosted caution over possible intervention by the foreign exchange authorities, especially as major South Korean companies such as Hyundai Motor Co compete with Japanese peers including Toyota Motor Corp in overseas markets.
"Few will ignore the authorities and push up the won here, especially as yen/won collapsed," said a South Korean bank dealer in Seoul.
TAIWAN DOLLAR
The Taiwan dollar was firmer than the previous close, which dealers said the central bank weakened through intervention, and exporters' demand for settlements.
On Tuesday, the island's central bank was spotted buying US dollars to stem the local currency's strength not only in the main foreign exchange market but also in the smaller market , dealers said.
In the prior session, the Taiwan dollar closed 0.2 percent weaker at 29.460 to the greenback, while it strengthened to 29.250 before the central bank stepped in the market.
RUPIAH
The rupiah lost 0.5 percent against the dollar on domestic corporate bids for the greenback and as the central bank was not been spotted in the market.
Some state-run banks bought the rupiah, but dealers said Indonesian exporters were behind the demand, rather than the authorities.
While most other emerging Asian currencies benefited from the BOJ's move, the rupiah did not much recover its losses.
"The rupiah will appreciate only when trade deficit narrows and growth numbers come out better," said a Jakarta-based dealer.
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