SINGAPORE: The South Korean won hit a near one-year high against the dollar on Tuesday and reached its strongest value against the yen on expectations of easing by the Bank of Japan, while other emerging Asian currencies were supported by signs that China's economy had turned the corner.
Investors, however, hesitated to add more bullish bets on regional units, taking their cue from share markets across Asia, which were subdued as the earnings season got underway.
The won's strength against the yen came on expectations that the Bank of Japan will loosen monetary policy more on Oct. 30 meeting.
Most emerging Asian currencies have been major beneficiaries of easing by central banks of developed countries as investors chase higher yielding assets.
"If the BoJ eases next week, that will provide chances of currency plays of selling the yen against some emerging Asian currencies such as the won, although I doubt if it creates huge fund flows to other Asian countries as there may be more risks of volatilities than opportunities for higher yields," said Jeong My-young, Samsung Futures research head in Seoul.
The Taiwan dollar gained on demand from exporters while interbank speculators lifted the Philippine peso and the Malaysian ringgit.
"The market trend is to drive appreciation in Asian currencies, at least for the short term, on signs that China's economy is stabilising," said Jeong.
Investors are awaiting the HSBC Flash China manufacturing purchasing managers' index (PMI) due on Thursday, the latest measure of the health of the world's second-largest economy.
WON
The won jumped to 1,100.0 per dollar, its strongest since Oct. 31 2011.
The South Korean currency touched 13.7528 to the yen, its highest since April 6 this year, trying to break a 200-week moving average at 13.7232.
The local unit has been staying weaker than the average since early 2008, helping South Korean exporters such as Hyundai Motor Co maintain price competitiveness against Japanese peers including Toyota Motor Corp in overseas markets.
Still, the won could not extend gains against both the dollar and the yen as some suspected Seoul's foreign exchange authorities of selling the local unit.
Offshore funds including model accounts took profits, while domestic importers bought dollars for settlements, dealers said.
Technically, the won is also seen nearly overbought versus the dollar and already excessively purchased to the yen. The 14-day dollar/won relative strength index (RSI) was at 31.18, around the 30 threshold, while the 14-day yen/won RSI stood at 24.32.
"The won is seen strengthening further. But it would be able to break 1,100 around the end of the month when exporters are more active," said a South Korean bank dealer in Seoul.
RINGGIT
The ringgit gained but it gave up some of its gains in subdued trading and on dollar demand from importers.
Some investors hoped that foreigners would bring money to buy government bonds. The central bank says the country plans to se ll 3. 0 bi l lion ringgit ($982.96 million) of these bo nds.
But a Malaysian bank dealer in Kuala Lumpur said foreign investors may use existing money to buy the bonds rather than bringing in fresh funds.
TAIWAN DOLLAR
The Taiwan dollar gained on exporters' demand for settlements in subdued trading, while importers limited its upside.
Interbank speculators hesitated to buy the local currency as domestic stocks slid and on worries about the island's economic outlook.
Investors stayed wary of possible intervention by the central bank to stem the currency's appreciation, although it has not been spotted in the market yet, dealers said.
PHILIPPINE PESO
The Philippine peso appreciated as interbank speculators added bullish bets in the currency.
But the trading was subdued as investors hesitated to build up excessive positions before the central bank's policy meeting on Thursday.
Bangko Sentral ng Pilipinas is expected to cut its key policy rate for a fourth time this year to support economic growth threatened by weak exports and a strong peso, a Reuters poll showed.
SINGAPORE DOLLAR
The Singapore dollar barely changed despite higher-than-expected consumer inflation.
The city-state consumer price rose 4.7 percent in September from a year earlier, beating a forecast of 4.2 percent rise in a Reuters' poll.
Investors were cautious over possible US dollar purchases by the central bank to check more appreciation in the best performing Asian currency of the year.
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