SINGAPORE: Most emerging Asian currencies rose on Tuesday as a surprising expansion in US factory activity spurred investors to add risky assets, although sustained worries about the slowing global economy limited the gains.
The Taiwan dollar enjoyed foreign financial inflows, while interbank speculators covered short positions in the Malaysian ringgit and the Philippine peso.
Asian stocks and the euro also gained after US manufacturing unexpectedly expanded in September for the first time since May as new orders and employment picked up.
Still, investors refrained from chasing emerging Asian currencies too aggressively with the global economy still sluggish and on lingering concerns over Spain's fiscal problems.
"Emerging Asian currencies will keep benefiting from liquidity by policy stimulus of developed countries. But the problem is that the US is the only warm place in the global economy for now," said Jeong My-young, Samsung Futures' research head in Seoul.
The lone recovery in the US economy is expected to support the dollar, preventing emerging Asian currencies from further appreciation, Jeong added.
Most regional currencies eased on Monday as Asia's manufacturers continued to struggle in the face of tepid demand from the United States and Europe.
Spain remained focus, with investors waiting for Madrid to seek a bailout and trigger the European Central Bank's bond buying programme, a scheme aimed at lowering the borrowing costs of indebted euro zone countries.
In addition, Moody's has yet to announce its review of Spain's rating, which could see Madrid's credit standing cut to junk status.
European officials said on Monday that while Spain is ready to request a euro zone bailout for its public finances as early as next weekend, Germany has signaled that it should hold off.
Asia-Pacific policymakers continued to adjust policies to tackle fallout from the global slowdown.
Australia's central bank cut interest rates, while South Korea's counterparty said it was now directing monetary policy at boosting economic growth, cementing expectations that it will cut rates next week.
After the Reserve Bank of Australia's rate cut, the Australian dollar fell, putting pressure on emerging Asian currencies.
Singapore central bank is also expected to ease monetary policy later this month, dealers and analysts said.
Asian foreign exchange authorities are unlikely to allow their currencies to keep strengthening and erode export competitiveness, they added.
TAIWAN DOLLAR
The Taiwan dollar advanced as inflows of foreign financial institutions prompted interbank speculators to join them amid a firmer euro.
The central bank has not been spotted slowing down the currency's strength, although investors stayed wary of possible intervention, dealers said.
PHILIPPINE PESO
The Philippine peso advanced, tracking the euro's rebound, and dealers expected the peso to strengthen further with usual increase in remittance inflows during the fourth quarter.
A foreign bank dealer in Manila said lack of local corporate dollar demand may also support the peso.
RINGGIT
The ringgit tried to clear resistance at 3.0475 per dollar, the 76.4 percent Fibonacci retracement of its September depreciation, as interbank speculators covered short positions in the local unit.
A Malaysian bank dealer in Kuala Lumpur said the ringgit is expected to head to 3.0400, its peak on Sept 18, if the currency strengthens past the retracement.
"It looks safe to add short-dollar positions unless the euro falls to 1.28," said the dealer.
But the Malaysian unit gave up some of earlier gains as the Australian dollar weakened after the RBA's rate cut, prompting leveraged accounts to take profits.
Meanwhile, investors also bought the ringgit against the Singapore dollar on growing expectations of policy easing by the city-state.
SINGAPORE DOLLAR
The Singapore dollar gained, although investors remained wary of US dollar bids by the Monetary Authority of Singapore (MAS) to check gains in the best performing emerging Asian currency this year.
There was market talk that agent banks of the MAS bought greenbacks at 1.2270 overnight, dealers said.
The Singapore dollar's upside was also capped by selling versus the ringgit.
WON
The won eased on growing caution over possible dollar-buying intervention by South Korea's foreign exchange authorities.
But the local currency recovered some of initial losses as exporters chased it for settlements and on demand from some offshore funds, dealers said.
The authorities have barely been spotted stemming the won's strength, dealers said.
"They may be taking a 'wait-and-see' mode for now, but I think they will step in if the 1,110 level (per dollar) is broken," said a senior foreign bank dealer in Seoul.
RUPIAH
The rupiah edged lower on dollar demand from local banks, but some foreign banks bought the local currency to purchase the country's bonds, limiting its downside dealers said.
Still, foreign banks' demand was not strong enough yet to turn the rupiah higher, dealers added.
"Unless bond inflows are huge, the rupiah will stop at 9,575 per dollar," said a Jakarta-based dealer, referring to the previous close.
"They also picked up levels, not chasing it desperately," he added.
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