The Taiwan dollar touched it highest level in about 19 months on Tuesday, but most other Asian currencies stepped back from recent highs on fears that central banks would intervene to curb exchange rate gains.
The Taiwan dollar hit 33.075 per US dollar, its strongest since July 2002, before the central bank stepped in to cap the rise, dealers said.
Dealers in Singapore said settlement of stock purchases by foreign investors pushed the currency up. Foreign investors had bought over $700 million of Taiwan stocks last week, they said.
Central bank intervention was also suspected in South Korea, where the won touched a high of 1,157.0 per dollar in local trade, just shy of Friday's four-month high of 1,156.0 hit in offshore trade.
The Singapore dollar weakened as far as 1.6783 per US dollar before recovering, but it stayed well clear of last Friday's four-year peak of 1.6675. Dealers said the fall came after a sharp fall in the Thai baht on Tuesday morning.
The baht fell to a one-week low of 39.05 per dollar amid talk that a foreign bank was buying US dollars on behalf of the central bank to curb currency gains, dealers said.
However, rising exports and capital inflows into Asian equities meant the appreciation pressure on regional currencies was expected to continue despite the efforts of central banks.
Peter Redward, strategist at Deutsche Bank in Singapore, said the upward pressure on the Taiwan dollar and South Korean won, on a day when the Japanese yen eased against the dollar, showed the amount of capital rushing into these economies.
The Singapore dollar has gained almost 1.5 percent so far this year, against a nearly two percent rise for the whole of 2003.
The Taiwan dollar has gained about 2.6 percent, against 2.2 percent in 2003, and the Korean won has risen nearly three percent versus a depreciation of about one percent last year.
Speculation of revaluation of the Chinese yuan, which is managed in a narrow range near 8.28 per dollar, and its potential strengthening impact on regional currencies has been another major factor attracting inflows into the region.
The yuan non-deliverable forward premium on the three-month tenor traded around Monday's one-month high of 1,400 points to the US dollar.
A senior Chinese state official said speculation on the yuan has hindered plans to reform the exchange rate regime, but analysts said delaying an adjustment of the Chinese currency was not the solution.
The Philippine peso edged down to hit 56.17 per dollar, even as the market in Manila speculated on the possibility of new central bank regulations aimed at tougher monitoring of foreign exchange transactions by local companies.
However, dealers said demand for dollars was genuine as companies were trying to hedge their requirements ahead of the import season that usually begins in the second quarter.
Earlier this month the peso hit an all-time low of 56.22 per dollar.
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