SINGAPORE: Most emerging Asian currencies extended gains on Monday, enjoying capital inflows to the region after the Federal Reserve's aggressive policy stimulus last week, and the Indian rupee hit a four-month high on the government's reforms.
The rupee has gained up to 1.2 percent to 53.66, the strongest since May 15, as the Indian government on Friday opened up the country's supermarket sector to foreign retailers and allowed more foreign investment in airlines and broadcasters, a day after sharply increasing the price of heavily-subsidized diesel.
The South Korean won hit a six-and-a-half month high on stock inflows, and the Taiwan dollar touched its peak in more than four months on incoming funds.
The Indonesian rupiah also hit a near seven-week high on bond inflows.
"Asian currencies have room to rise further as the Fed did not only pump up money but also let investors buy time," said Jeong My-young, Samsung Futures' research head in Seoul.
"Most risk currencies, especially the euro, looked technically overbought. But Asian FX may not fall much even though the euro may see corrections, as people will look for chances to buy the currencies against the euro," she added.
Before this emerging Asian units had weakened versus the euro because the regional units did not reflect the rise in the euro on worries that a slowing global economy would keep hurting export-oriented Asia.
Still, investors grew more cautious over possible intervention by local authorities to stem their currency gains. The central banks of Taiwan and Philippine were spotted buying dollars, dealers said.
Most regional units were also seen excessively bought, suggesting they may suffer from short-term corrections.
The 14-day relative strength indices (RSI) of US dollar/Singapore dollar, US dollar/Taiwan dollar, dollar/rupee and dollar/baht stayed below the threshold 30, indicating those pairs are in oversold territory.
The RSI of dollar/won, dollar/peso and dollar/rupiah stood above the threshold, but not far from that line.
The Philippine peso and the Singapore dollar eased.
TAIWAN DOLLAR
The Taiwan dollar leaped to 29.198 against the US dollar, its strongest since May 3, on foreign funds inflows and as domestic exporters chased it on expectations of further appreciation.
But the central ban was spotted buying US dollars around 29.200 to slow down the local unit's strength, while importers joined the bids, dealers said.
RUPIAH
The rupiah hit 9,443 to the dollar, the local unit's strongest since Aug. 1 on bond inflows, dealers said.
The Indonesian currency found a resistance at that level as local banks bought dollars on behalf of their local corporates.
Still, the rupiah is expected to rise further on more inflows with the Fed's stimulus, dealers said.
"The QE3 will boost inflows and investor confidence in foreign direct investments here," said a Jakarta-based dealer, adding the rupiah may head to 9,400.
"The policy would be beneficial for Indonesia as it would strengthen the rupiah without BI having to dig deep into its foreign exchange reserves," said the dealer, referring to Bank Indonesia.
The central bank had been seen intervening to stem weakness in the rupiah, according to dealers.
WON
The won advanced to 1,113.3 per greenback, its strongest since March 2, on demand linked to foreign investors' stock purchases.
Foreigners bought a net 503.1 billion won ($450.38 million) worth of Seoul shares after absorbing a net 1.28 trillion won on Friday, according to the Korea Exchange data.
Caution grew over possible intervention by the foreign exchange authorities to stem the won's strength, and domestic importers bought dollars for payments.
"The authorities may allow more gains if the euro and stocks stay firm, while the speed of appreciation is slow," said a senior foreign bank dealer in Seoul.
"But they will step in 1,110," he said.
PHILIPPINE PESO
The Philippine peso weakened as traders reduced bullish positions with short-term forwards negative and as the central bank was spotted intervening by buying dollars, dealers said.
The peso started local trade firm at a session peak of 41.33 per dollar, but turned lower. The central bank was seen around 41.35, dealers said.
"Onshore swap points collapsed and were quoted at negative points. Negative points have a negative carry on long peso positions and make it expensive to hold on to dollar short positions overnight," a foreign bank dealer in Manila.
Most of the short-term peso forwards from overnight to two-month were quoted at a discount, indicating that it was costlier to hold a short dollar position.
SINGAPORE DOLLAR
The Singapore dollar eased on local bank offers around 1.2200 to US dollar with disappointing export data cementing caution over the central bank's intervention.
Singapore's non-oil exports in August fell more than expected, raising the prospects of the city-state entering into a recession.
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