SEOUL: The Taiwan dollar hit a near two-week high on a record yuan, leading gains in emerging Asian currencies on Tuesday, but most regional units were on the course for annual losses as the US Federal Reserve plans to start cutting its stimulus.
The Taiwan dollar rose as investors bought it for proxy trades to bet on a stronger yuan.
The renminbi earlier hit a record high after China's central bank fixed the currency's mid-point to the dollar at its highest since the landmark revaluation in 2005.
Malaysia's ringgit advanced as investors covered short positions in thin trading before the year end.
Still, most emerging Asian currencies were set to suffer losses in 2013 and their outlook stayed bleak as the Fed announced it would scale back its bond-buying programme, traders and analysts said.
"I expect EM Asia to come under further selling pressure from time to time on the back of the Fed tapering," said Sim Moh Siong, FX strategist for Bank of Singapore.
"But the worst of the sell-off seems behind us," Sim said.
The Indonesian rupiah and Indian rupee are likely to stay most vulnerable, while the South Korean won , the Singapore dollar and the Taiwan dollar should remain resilient, he added.
The rupiah and the rupee led slides among emerging Asian currencies in 2013, according to Thomson Reuters data.
The Indonesian currency has lost 21.0 percent against the dollar as it is regarded as the Asian currency most vulnerable to capital outflows on the Fed's policy shift because of the Southeast Asian country's current account deficit.
The rupee has fallen 11.2 percent on weak economic growth and high inflation.
The Philippine peso slid 7.5 percent, while Thailand's baht fell 6.9 percent. The ringgit has been down 6.8 percent.
But the yuan and the South Korean won bucked the trend. The Chinese currency has gained 3.0 percent, becoming the best-performing Asian currency of the year.
The won rose 1.4 percent in the local market on current account surplus and as some investors saw the country's assets safer than ones in other emerging Asian countries.
TAIWAN DOLLAR
The Taiwan dollar rose as much as 0.9 percent to 29.765 to the US dollar, its strongest level since Dec. 19.
Demand from local exporters and foreign financial institutions supported the island's currency, traders said.
The central bank, however, was spotted buying the US dollar around 29.800 to limit the Taiwan dollar's upside, traders said.
RINGGIT
The ringgit gained, but currency investors have barely reacted so far to Malaysian Prime Minister's new measures to cut public spending, traders said.
Prime Minister Nazib Razak has announced new 11 steps, state news agency Bernama reported, as the country is under pressure to rein in spending and boost tax collection to tackle its high budget deficit.
Comments
Comments are closed for this article.