Most emerging Asian currencies edged up in subdued trading hour ahead of the US presidential election on Tuesday, with risk sentiment supported by the growing prospect of a victory for Democratic candidate Hillary Clinton. Despite South Korean President Park Geun-hye's mounting political troubles, the won hit a near two-week high, leading regional gains. The won was bolstered by expected demand linked to Doosan Bobcat Inc's initial public offering.
The Philippine peso turned firmer after a seven-year low. Clinton is seen securing a 90 percent chance of defeating Republican Donald Trump in the vote, according to a survey by l Reuters/Ipsos States of the Nation project. Investors have been favouring Clinton as she is expected to bring stability and certainty, while Trump's vague stances on trade, foreign policy and immigration issues unnerved markets.
"If Clinton wins, we will see a slightly weaker USD but high yielders should outperform. If Trump wins, it will be a higher USD but weaker lower yielders," said Andy Ji, Asian currency strategist for Commonwealth Bank of Australia in Singapore. The greenback may not find significant support after the election despite expectations of a US interest rate hike in the next month, as the prospects have been widely priced in, Ji said.
"December hike is almost all priced, although a gradual path is priced, which should not give USD too much lift." Still, traders hesitated to take large bullish bets, having learnt a lesson from Britain's unexpected decision in June to leave the European Union.
China's yuan hovered around a one-week low as the central bank set its daily guidance rate weaker, while exports and imports in October fell more than expected. The won rose as much as 0.8 percent to 1,134.2 per dollar, its strongest since October 26. Construction equipment maker Doosan Bobcat's IPO will raise 900.8 billion won ($793.7 million). Foreign investors are estimated to take 270-320 billion won, market sources said.
Offshore funds unwound bearish bets on the won, providing further support, traders said.
Still, investors remainj wary of the political scandal surrounding President Park. Park earlier said she will withdraw her nominee for prime minister if parliament recommends a candidate and is willing to let the new premier control the cabinet, seeking to defuse a crisis rocking her presidency. She also indicated she was willing to relinquish some control over state affairs.
The peso earlier eased 0.2 percent to 48.69 per dollar, its weakest since September 2009 as the government posted a budget deficit of $1.6 billion in September, the largest monthly shortfall so far this year. Foreign investors sold Manila stocks on Monday after cutting equity holdings over the two previous weeks, the Philippine Stock Exchange data showed. The peso's outlook remained bearish as some analysts and traders saw domestic assets as overvalued. "We are seeing a continuing repricing of what's been perceived as expensive financial assets," said a senior Philippine bank trader in Manila. The peso is seen weakening to 49.00 in a near term, around previous lows in 2009, the trader added.
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