SINGAPORE: Most emerging Asian currencies eased on Wednesday as the dollar held firm after an uptick in US inflation allowed the greenback to take a breather from the recent selloff.
Indonesia's rupiah led losses among regional units on month-end corporate dollar demand. The Malaysian ringgit also fell as oil prices dipped on rising US storage volumes.
The dollar stayed firm against a basket of major currencies as data showed on Tuesday US consumer prices in February rose, which helped to somewhat temper the Federal Reserve's dovish stance at last week's policy meeting.
That policy meeting raised doubts about how soon the Fed would start raising interest rates, triggering a selloff of dollar-denominated holdings and sent emerging Asian currencies rallying.
Some traders and analysts expect the dollar to resume its fall.
"The dollar's correction is not seen as being over yet. If the dollar index falls to the low on the Fed's meeting day, Asian currencies may strengthen a bit more," said Jeong My-young, Samsung Futures' research head in Seoul.
The index, gauge of the dollar's performance against a six major currencies, fell to 96.628 on March 18 when the Fed downgrade its growth and inflation forecasts, indicating the US central bank may take a patient approach to raising borrowing costs.
"If the index rises above the day's high, Asian currencies will resume depreciation," Jeong added, referring to the high of 99.797 on March 18.
RUPIAH
The rupiah slid on month-end dollar demand from local companies such as importers.
Jakarta shares fell 0.8 percent after foreign investors were net sellers in the previous three consecutive sessions.
Traders were also cautious over possible intervention by the central bank to support the currency.
The official Jakarta Interbank Spot Dollar Rate, which the central bank introduced in 2013 to manage exchange rate fluctuations, was fixed at 12,932 rupiah per dollar, stronger than Tuesday's 12,972.
WON
The won bucked the depreciation in regional currencies as exporters' month-end demand for settlements prompted traders to cut dollar holdings.
Offshore funds also bought the South Korean currency on dips to cover short positions, which they had built up before the Fed's latest policy meeting, traders said.
"Position adjustments posed risk of a break in the 1,100 level," said a foreign bank trader in Seoul, referring to the won's value against the dollar.
Traders still stayed cautious over possible intervention by the foreign exchange authorities to stem the won's strength around the level.
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