SINGAPORE: Most emerging Asian currencies eased on Wednesday as sustained uncertainty over Spain's bailout and a slowing global economy raised the prospect of stimulus steps by regional central banks to shore up growth.
The Singapore dollar slid against both the US dollar and the Thai baht on growing expectations that the Monetary Authority of Singapore (MAS) may ease policy later this month.
The Malaysian ringgit lost 0.4 percent against the US dollar and the Philippine peso slid 0.2 percent.
"Asian growth is still soft and Asian central banks will cut rates further. Once the euphoria of the US Fed QE wears off then the US dollar will strengthen (against emerging Asian currencies)," said Jonathan Cavenagh, a senior FX strategist at Westpac in Singapore.
Cavenagh expected the MAS to ease policy by adjusting the slope of the Singapore dollar nominal effective exchange rate (NEER) and saw the potential for rate cuts across Asia during the fourth quarter.
The Asian Development Bank cut most of its 2012 and 2013 growth estimates for developing Asia as a slump in global demand weighs on the region's power houses China and India, as well as on its other export-dependent economies.
China's normally robust service sector in September weakened to its lowest level since November 2010, while Australia's trade deficit blew out its widest in three-and-a-half years in August, adding to gloom on the global economy and denting risk appetite.
Spanish Prime Minister Mariano Rajoy put investor patience to the test, saying on Tuesday a request for European aid was not imminent and denying a report Madrid could apply for help as soon as this weekend.
Still, emerging Asian currencies are expected to stay resilient thanks to stimulus steps by major central banks, such as the US Federal Reserve's recent quantitative easing.
A senior US bank trader in Singapore said regional currencies are likely to rise 1.0-1.5 percent against the dollar from the current levels, given still ample liquidity.
RINGGIT
The ringgit eased both against the US dollar and the Singapore dollar.
The Malaysian unit found a resistance line at 2.4760 versus the city-state's currency, around its recent peaks to the Singapore dollar.
Still, some traders looked to buy the ringgit to the neighbouring currency, expecting MAS to ease policy later this month.
"There is some interest in buying the Singapore dollar/ringgit, but the interest is not significant as the market expects easing bias in Singapore monetary policy," said a Kuala Lumpur-based dealer.
SINGAPORE DOLLAR
The Singapore dollar edged lower after a business survey showed the city-state's manufacturing sector contracted for a third consecutive month in September.
That boosted the prospect of a recession in the third quarter and raised expectations for a policy easing this month.
PHILIPPINE PESO
The Philippine peso eased on renewed concerns over Spain, but traders bought the local unit around 41.70 per dollar.
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