The Korean won and the Thai baht led gainers in Asia on Thursday with the help of this week's interest rate increases. Central banks in Bangkok and Seoul raised policy rates by a quarter point. Thai rate rise had been widely anticipated, but Bank of Korea's move came a month earlier than many economists had expected and analysts said Asian authorities seemed increasingly willing to let currency gains help curb price rises.
Most Asian currencies posted strong gains in 2010 driven by foreign capital attracted to the region by its swift recovery from the global financial crisis and prospects for higher returns than offered by sluggish developed economies. With growth still seen strong this year too, these flows are expected to continue.
The rupiah fell to within sight of a six-month low as rising dollar/rupiah NDFs spooked investors. Funds remained good buyers in the NDFs, with the one month last up to 9135-9155 per dollar. Some small outflows from the bond market also pressured the rupiah lower.