SINGAPORE: The South Korean won and the Taiwan dollar edged up on Friday, supported by improving US economic data, but other emerging Asian currencies slipped on expectations of intervention by local authorities to stem the rise of the regional units.
Investors were also cautious ahead of the US Presidential election on Nov. 6 and the challenge of the "fiscal cliff" that Congress must tackle soon after.
A rise in US private sector employment in October and a jump in consumer confidence helped push the won and the Taiwan dollar higher as inflows from foreign financial institutions increased.
But the Indonesian rupiah slid as local corporates sought dollars while the Singapore dollar eased on speculation that local authorities would intervene to prevent it from strengthening past 1.2200 to the US dollar.
Suresh Kumar Ramanathan, head of regional interest rate and FX strategy at CIMB Investment Bank, said he expected emerging Asian currencies to lose ground after the US election.
"Global risk appetite will skew towards cautious tone for the rest of the world post-November 6 Presidential election," said Ramanathan in Kuala Lumpur.
After the election, Congress must deal with a "fiscal cliff" -- up to $600 billion in expiring tax cuts and spending reductions that are set to kick in next year -- which threatens to hurt the US economy.
Investors' immediate focus, however, is the US nonfarm payrolls data due at 1230 GMT, which is expected to show employers added 125,000 jobs in October, with the jobless rate ticking up to 7.9 percent from September's 7.8 percent.
"Any upside surprise on this front, we think, may fuel global risk-taking behavior instead of boosting the dollar across the board," OCBC Bank said in a note.
On the week, Asian currencies have been mixed after most of them enjoyed gains in the previous week.
The won rose 0.6 percent against the dollar and the Taiwan dollar gained 0.3 percent, according to Thomson Reuters data.
The Malaysian ringgit has fallen 0.5 percent with dollar-short covering, while the rupiah has eased 0.3 percent, data for the week showed.
WON
The won gained on exporters' demand for settlements in extremely thin trading, while its upside was tightly limited as investors stayed cautious over possible intervention by the foreign exchange authorities.
The authorities were spotted overnight trying to stem the won's strength via the non-deliverable forwards market, dealers said.
Still, investors expect the South Korean currency to stay firm despite uncertainty over the US election next week, dealers added.
"There are few reasons to push down the won, given continuous exporters' deals and firm stocks. The won will be around the current levels," said a foreign bank dealer in Seoul.
RUPIAH
The rupiah eased on dollar bids from local corporates, but bond inflows relieved the Indonesian currency, dealers said.
But some dealers expect demand for the bonds not to last long, saying the rupiah is likely to stay under pressure.
"These inflows are surprising.
But I expect if there are any more inflows, they will be linked to window dressing before the year-end," said a Jakarta based dealer.
Another trader pointed out risks from proposed hikes in electricity tariff next year and a prospective fuel price raise.
On Oct. 23, Indonesia's parliament approved the government's 2013 budget plan and left open the possibility of a fuel price hike. Indonesia does plan to cut power subsidies next year by hiking electricity tariffs by 15 percent, to save 11.8 trillion rupiah ($1.23 billion) that will be used to improve infrastructure.
The trader said the rupiah could weaken to 9,700 per dollar by the end of the year, although the central bank will slow down, especially in December.
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