Most emerging Asian currencies fell on Friday, paring some of their weekly gains, as risk sentiment suffered after a doctor in New York tested positive for Ebola, the first case in America's largest city. South Korea's won slid as offshore funds sold it to take profits from the best performing emerging Asian currency of the week, while the Thai baht weakened on dollar demand from importers.
A physician with Doctors Without Borders who returned to New York City after treating Ebola victims in West Africa tested positive for the virus, setting off fresh fears about the spread of the disease. "The Ebola case gave investors a temporary chance to book profits from Asia FX appreciation amid sustained caution over emerging market assets," said Yuna Park, a currency and bond analyst at Dongbu Securities in Seoul.
Despite lingering concerns over slowing global growth, most emerging Asian currencies were set for weekly gains, led by the won. The South Korean currency has risen 0.8 percent against the dollar so far this week, according to Thomson Reuters data, on demand from exporters for month-end settlements. Indonesia's rupiah has appreciated 0.3 percent as reform-minded President Joko Widodo took office.
The Indian rupee ended the week up 0.2 percent amid hopes for further economic reforms by the government. Domestic financial markets have been closed since Thursday for holidays and trading will resume on Monday. The Philippine peso has gained 0.2 percent. "I see upside for regional currencies on better-than-expected growth in China and outlook for the euro zone," said Dariusz Kowalczyk, a senior economist and strategist for Credit Agricole CIB in Hong Kong.
The won fell as shares in Seoul and much of the rest of Asia weakened on reports of the first Ebola case in New York. South Korea's economic growth accelerated as expected in the third quarter, but cooling global growth hurt exports during the period. That indicated more monetary easing may be necessary to support its fragile recovery. The won recovered some of losses on expectations of inflows linked to Korea Electronic Power Corp's (KEPCO) stock sale. The state-run utility launched on Thursday an up to $830 million share offering, IFR reported, citing a term sheet of the deal. Foreign investors took about 56 percent of the offering, a KEPCO official said.
"The won found support around 1,062 as suspected dollar offers related to the deal or exporters' demand were seen," said a foreign bank trader in Seoul, referring to the won's value against the dollar. The baht eased on dollar demand from importers for payments. Foreign and local investors sold the Thai currency on expectations of further gains in the dollar amid solid US economic data. The Thai currency later pared some losses on bond inflows. Foreign investors bought a combined net 2.95 billion baht worth of debt in the first three days of the week, the Thai Bond Market Association data showed. Last week, foreigners sold a total of 255 million baht in bonds, according to the data.
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