SINGAPORE: Emerging Asian currencies edged up on Thursday as a rebound in the Australian dollar spurred short-covering, but many investors were hesitant to add fresh bets before central bank policy meetings in Europe and Japan, as well as key US economic data.
The Indian rupee led gains in the region, hitting a five-and-a-half month high on hopes the government may soon announce more reforms to reinvigorate the economy. Taiwanese exporters lifted the island's currency.
The Philippine peso rose as the country's stocks touched a record high on foreign demand, dealers said. The Singapore dollar and the Malaysian ringgit gained more than 0.2 percent versus the greenback, respectively.
But overall gains in emerging Asian currencies were capped as investors remained wary of potential intervention by regional central banks to stem their currency appreciation amid sustained worries about the global economic slowdown.
"This is not a new trend of Asia appreciation but position adjustments ahead of the ECB tonight and the BOJ and US non-farm payrolls tomorrow," said a senior Malaysian bank dealer in Kuala Lumpur.
"Headlines from Europe are still negative and Asian is adopting competitive FX management vis-a-vis trading partners," said the dealer, adding regional authorities are likely to keep checking gains in their currencies.
Emerging Asian currencies are likely to extend gains if US economic data offsets worries about the sluggish global economy, dealers and analysts said.
Later on Thursday, weekly jobless claims and US factory orders for August will be released, as well as minutes from the US Federal Reserve's Sept. 12-13 meeting at which the central bank launched aggressive stimulus packages aimed at reducing high unemployment.
These reports precede Friday's monthly payroll data, the first such labour market update since the Fed's action.
The ECB is expected to keep interest rates at a record low of 0.75 percent after last month announcing a bond-buying programme for debt-ridden members.
The BoJ is also seen standing pat at its Oct. 4-5 meeting after boosting its asset-buying programme last month, but it has been under intense political pressure to offer more stimulus to spur growth and weaken the yen.
Still, emerging Asian currencies are expected to be supported by major central banks' liquidity injections last month, some analysts said.
Credit Agricole Corporate & Investment Bank said emerging currencies will find more boosts if Spain officially asks for aid from Europe and China joins a policy easing club.
"Against such a backdrop, with many investors likely waiting for one of these triggers to enter long EM FX, it seems interesting to buy some EM currencies on dips," it said in a note.
TAIWAN DOLLAR
The Taiwan dollar rose as the island's exporters chased it with the euro's rebound, while the central bank has not been suspected of buying the US dollar yet, dealers said.
But foreign financial institutions and local interbank speculators hesitated to add positions in either ways before key data and events abroad.
PHILIPPINE PESO
The Philippine peso edged up as Manila stocks hit a record high on demand from foreign investors.
The peso's upside was capped as investors expected the central bank to prevent the local unit from strengthening past 41.50.
But a foreign bank dealer in Manila said such intervention has not been spotted yet.
"The market was just speculating that there will be intervention at 41.50 since it's a good round figure. But my bet is they will show interest at 41.30," said the dealer.
"They will know there will be inflows for stocks," he added.
WON
The won eased as South Korean importers bought dollars for payment amid prevailed caution over possible intervention by the foreign exchange authorities to stem the currency's strength.
On Sept 28, the South Korean unit hit a near 11-month high, increasing expectations that the authorities may step in the currency market to maintain export competitiveness amid a slowing global economy.
"It is difficult to chase the won here around this level, given intervention caution. I wonder how actively exporters buy the won here," said a senior foreign bank dealer in Seoul, referring to the 1,110 per dollar.
But some shipbuilders was spotted unloading their dollar holdings in swap markets, supporting the spot won, other dealers said.
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