Asian regional currencies strengthened on Monday, supported by softer oil prices and a weaker US dollar, which hit a two-month low against the euro and fell about a percent versus the yen.
The South Korean won rose to a high not seen since April 28, before giving up some of those gains after state-run banks were spotted buying US dollar. Dealers said they suspected the banks were acting on behalf of the government.
He said as the won approaches 1,140.3 per dollar, a 3-1/2 year high hit on April 13, it was more likely that the central bank intervene aggressively to rein it in.
He said there was more room for the Singapore dollar to gain. According to Flint's calculations, it was only around a quarter percent stronger than the mid-point of a trade-weighted policy band the central bank uses to manage the currency.
The Singapore dollar on Monday rose by more than a quarter of a percent to around 1.7043 per dollar. The Taiwan dollar rose by almost the same magnitude to a high of 33.46.
The US dollar fell amid speculation about the pace and magnitude of US monetary policy. The Federal Reserve's policy-setting body is due to meet later this month and most economists expect it to raise key rate by 25 basis points from a 46-year low of one percent.
But most analysts believe the Fed would remain committed to tightening at a "measured" pace and would shy away from larger rate hikes, an approach analysts said could benefit markets.
"Such a scenario would favour a strong performance in global equity markets combined with out-performance in pro-growth currencies, particularly if oil prices continue to fall as we expect," said Ashley Davies, currency strategist at UBS in Singapore.
Most Asian currencies are sensitive to foreign investment in their equity markets and most Asian economies are expected to outperform other emerging market economies.
NYMEX crude oil futures eased further below $40 a barrel, after Thursday's Opec decision to raise production quotas and an increase in US inventories. NYMEX futures had hit 21-year highs above $42 per barrel last week.
The spike in oil prices had raised fears that higher energy costs would cut Asia's trade surpluses and hurt global growth and hit export-driven Asian economies.
He said a $10 per barrel rise in oil prices over a period of a year could cost as much as 1.6 percent of Thailand's gross domestic product, 1.5 percent of Korean GDP and 1.2 percent of Taiwan's GDP.
The Thai baht rose as high as 40.57 per dollar, its highest in four sessions.
Dealers in Bangkok said the market showed only a muted response to disappointing first-quarter GDP data that showed growth of 6.5 percent compared to the same quarter the year before, against expectations of 7.5 percent.
The Indonesian rupiah, which had taken a beating last week and fallen to its lowest since April 2002, rose more than a percent to a five session high.
The Philippine peso posted moderate gains, after hitting a one-week low of 55.94 on Friday.
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