SINGAPORE: The South Korean won led losses among emerging Asian currencies on Wednesday as the dollar hit an 11-month high on strong US housing data.
Offshore funds sold the won and the Malaysian ringgit. The Indonesian rupiah slid on month-end corporate dollar demand and on worries over the nation's current account and budget deficits.
China's yuan broke a five-session rising streak after the central bank set the official guidance rate slightly weaker.
The dollar rose to a near one-year high against a basket of six-major currencies after data showed US housing and building permits rebounded strongly in July. That indicated the housing market was back on track after stalling in the second half of last year.
"Solid US data usually boost sentiment for long dollar bets against all other currencies in these days," said Jeong My-young, Samsung Futures' research head in Seoul.
"Pressure on Asian currencies, however, is likely smaller than others as funds are moving from Europe to Asia," Jeong said.
In terms of potential catalysts, investors are focusing on the US Federal Reserve's minutes from the July 29-30 policy meeting, as well as Fed Chair Janet Yellen's speech on Friday at a gathering of central bankers in Jackson Hole, Wyoming.
WON
The won slid, tracking its weakness in non-deliverable forwards markets as offshore funds covered short positions in the dollar.
Investors were also wary of possible intervention by the foreign exchange authorities to curb the won's appreciation.
The South Korean currency pared some of its earlier losses as traders said it was facing chart support at 1,021.8, a 55-day moving average.
RUPIAH
The rupiah fell on dollar demand from local importers for month-end payments.
Investors remained concerned over Indonesia's twin deficits with the current account gap widening more than expected in the second quarter and the outgoing government's draft 2014 budget failing to mention a fuel subsidy cut.
"The main focus and driver for Indonesian assets is the fuel subsidy," said Sean Yokota, head of Asia strategy for Scandinavian bank SEB in a client note.
"We prefer to be sidelined on USD/IDR and underweight bonds until Jokowi introduces the fuel subsidy cuts, which we expect late this year or early 2015 after Jokowi takes office in late October," Yokota said, referring to President-elect Joko Widodo.
RINGGIT
The ringgit eased as offshore funds took profits from its recent strength, while bond prices were also largely lower.
"Despite some day-to-day fluctuations, the dollar will rise eventually," said a senior Malaysian bank trader in Kuala Lumpur.
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