SINGAPORE: Most emerging Asian currencies eased on Thursday as investors took profits, trimming risky assets after gloomy data from the United States and Europe, although their downside was limited before the European Central bank's meeting.
The Indian rupee underperformed, hitting a four-month low, on dollar demand from oil importers, although investors stayed cautious over possible intervention by the central bank a day after it was suspected of selling dollars above 53.00.
One of the largest state-run banks was seen unloading, sparking some talk of an intervention by the Reserve Bank of India, but dealers said that the lender has also been buying dollars to meet custodian demands.
Euro zone factories sank further into decline last month, with the downturn hitting Italy and Spain hard and appearing to take root among core members France and Germany.
A slowdown in US private sector hiring also tempered the optimism from a better-than-expected manufacturing survey earlier this month.
The grim economic situation in Europe and the United States dampened Asian stocks and the euro.
"When Europe and the US are weak, Asian exports will get hit. Exporters won't have many dollars to sell. A weak Europe also means that they may pull back their profitable investments in Asia," said a senior dealer at a local bank in Kuala Lumpur.
"If the ECB admits that Europe is in trouble, that will confirm market fears and risk-off sentiment," the dealer added.
With recently downgraded Spain looking to raise funds in the bond market on Thursday, the ECB will be under pressure at its policy meeting to do more to shield weaker euro zone members from additional pain.
Any signals on the ECB's further stimulus may support emerging Asian currencies as investors are likely to use the liquidity to buy assets in the region.
Emerging Asian currencies had been buoyed from policy easing by major central banks earlier this year.
WON
Dollar/won rose slightly to end local trade at 1,129.0 on dollar demand from South Korean importers for payments and as offshore funds bought the pair.
Technically, it had been expected to gain more to 1,132.8, the 38.2 percent Fibonacci retracement of its April-May slide. The next level was seen at the 50.0 percent retracement of 1,135.1.
But exporters sold the pair for settlements, causing some stop-loss selling, dealers said.
"Exporters came earlier than I expected. If someone tries to lift the pair more, that would be good chances to sell it on the rallies," said a foreign bank dealer in Seoul.
SINGAPORE DOLLAR
US dollar/Singapore dollar edged up on short-covering, but faced resistance between 1.2426-1.2432.
The pair has the tenkan line on the daily Ichimoku chart at 1.2426. US dollar/Singapore dollar has been lower than the tenkan line since mid-April.
It also has the 23.6 percent Fibonacci retracement at 1.2432 of its March-April slide.
TAIWAN DOLLAR
US dollar/Taiwan dollar dipped as Taiwanese exporters sold the pair on rallies, while foreign investors bought it amid weaker domestic shares.
Taiwan's central bank has not been spotted buying or selling US dollars, dealers said.
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