SINGAPORE: South Korea's won led gains among emerging Asian currencies on Monday as investors cut dollar holdings on broad weakness in the greenback.
The won rose after rating agency Standard & Poor's said on Friday it raised South Korea's sovereign credit outlook on to positive from stable, citing economic growth and sound fiscal conditions. The currency hovered near a six-year high versus the yen.
The dollar index, the greenback's value against a basket of six major currencies, slid to 84.565 after the index posted its 10th straight week of gains last week.
"The USD move since August has run ahead of the rates market. The regional currencies should be supported this week," said Andy Ji, Asian currency strategist for Commonwealth Bank of Australia in Singapore, referring to emerging Asian currencies.
Regional units may gain momentum ahead of a monetary policy meeting of the European Central Bank on Oct. 2, Ji said.
"Given the liquidity implications, Asian currencies will cautiously price in the positive spillover on ECB's further easing ahead of the meeting."
In August, most emerging Asian currencies rose on hopes that the ECB's stimulus would help investors borrow cheap euros to buy higher-yielding assets in emerging markets.
Still, investors hesitated to chase emerging Asian currencies ahead of economic data such as China's flash manufacturing PMI on Tuesday. That could provide further clues on how severe the slowdown in the world's second-largest economy could be.
The US Federal Reserve is also expected to raise interest rates more quickly than had been predicted.
WON
The won gained on increasing demand from exporters for settlements as a month-end approaches and as offshore funds bought the currency.
Caution increased over possible intervention by the foreign exchange authorities to stem its strength as the won stayed near a six-year high against the yen. South Korea's companies compete against Japanese rivals in overseas markets.
The South Korean currency rose as much as 0.3 percent to 9.5392 to the yen, compared to a six-year high of 9.5171 hit on Thursday.
South Korea's finance minister said on Saturday it would be best if the central bank adopted a policy stance that would support Asia's fourth-largest economy.
RINGGIT
The ringgit rose as interbank speculators cut dollar holdings, tracking the greenback's broad weakness.
The Malaysian currency's non-deliverable forwards strengthened, but some leveraged funds sold the ringgit in one-month NDFs around 3.2300 per dollar, traders said.
TAIWAN DOLLAR
The Taiwan dollar advanced as exporters bought it around 30.200 per the US dollar for settlements.
Foreign investors, however, sold local stocks, limiting upside in the island's currency.
Taiwan stocks lost 1.1 percent.
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