SINGAPORE: Most emerging Asian currencies rose slightly on Tuesday with the South Korean won and the Taiwan dollar gaining from exporter demand, with analysts noting recent policy stimulus by major central banks could help regional units offset a sluggish global economy.
The Philippine peso edged higher as traders showed muted reaction to a dip in the country's imports in July. (the euro turned lower in the afternoon).
Asian currencies' appreciation came even as regional stocks edged lower amid worries that a slowing global economy will keep biting into Asia's exports, the area's main growth engine.
"The outlook for Asian currencies remains bright as major central banks decided to prevent downside risks on the economy with unlimited bond-buying. The liquidity pump will give Asian currencies room to rise more," said Yuna Park, a currency and bond analyst at Dongbu Securities.
"The China economy is also expected to improve if funds from the US and the Europe come to Asia," said Park, adding the ringgit, the Thai baht and the Singapore dollar may lead the gains.
Asian foreign exchange authorities are likely to try to slow down their currency gains, but they would not resist a global trend, she said.
Most emerging Asian currencies have gained so far this month as the Federal Reserve and the Bank of Japan eased monetary policies to spur their economy, while European policy makers took measures to tackle the euro zone's debt crisis.
Still, regional units were not free from worries about a lukewarm global economy, which analysts said increased chances of intervention across the region.
Thailand's exports in August fell 6.95 percent from a year ago, worse than expected. Germany's business confidence in September slid for a fifth consecutive month and Caterpillar Inc., the world's largest maker of earth-moving equipment, cut its earnings forecast.
The euro zone's debt crisis is still far from over with Spain staying in focus. Its government bond yields rose on concerns that the country is dragging its feet in requesting the international bailout that most market participants expect.
The worries have prompted investors to book profits from emerging Asian currencies since last week.
TAIWAN DOLLAR
The Taiwan dollar advanced as some domestic exporters bought for month-end settlements around 29.340-29.350 to the US dollar.
The central bank has barely been spotted intervening, although it may step into the currency market around the last minutes of domestic trading to weaken the closing price, dealers said.
Still, local importers also bought US dollars for payments, limiting the Taiwan dollar's upside, dealers added.
WON
The won gained on demand from South Korean exporters for month-end settlements, although interbank speculators hesitated to join them on caution over possible intervention by the foreign exchange authorities to stem the currency's strength.
Sustained worries about a slowing global economy also kept the lid on appetite for the won among interbank speculators.
"Some preferred the won, given shipbuilders' demand, but I wonder how many more dollar offers we will see here," said a senior foreign bank dealer in Seoul, adding the market is seen consolidating.
PHILIPPINE PESO
The Philippine peso edged higher with the euro holding ground, while traders showed muted reaction to a dip in the country's imports in July.
Philippine exports fell in July, for the first time in three months, on slower electronic shipments, highlighting weak demand from the country's main trading partners as a sluggish global economy bites.
The weak indicator does not necessarily mean a pressure on the peso, a foreign bank dealer in Manila said.
"The data was prior to the QE3 and it did have much of an impact as most of it was already expected," the dealer said.
"The test will be the data after QE3," he added.
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