Foreign exchange authorities in parts of Asia checked falls in their currencies, which investors dumped on risk aversion amid growing fears over radiation leaks in Japan. Seoul's authorities were spotted selling dollars as the won hit a fresh 2-1/2-month low after intervention in overnight non-deliverable forward (NDF) market, dealers said.
Central banks from the Philippines and Indonesia sold dollars while there was talk of dollar sales by the Monetary Authority of Singapore. Regional authorities are expected to step into currency markets again as long as worries about Japan push down their currencies further, analysts and dealers said.
"Asian countries, especially countries like Korea where inflation is a problem, will avoid a weaker currency, although they don't want their currencies to strengthen," said Jeong My-young, a currency strategist at Samsung Futures in Seoul. Even before the devastating earthquake in Japan last Friday, investors reduced positions in currencies of emerging Asian countries where policymakers were seen to be behind the curve in fighting inflation. "South Korea has enough power, especially after dollar-buying intervention. And with the recent yen's surge, exporters secured more than competitiveness," Jeong added.
The won fell to as low as 14.7144 against the yen, which on Thursday soared to a record high against the dollar. South Korea is the home of Samsung Electronics and Hyundai Motor, which compete with Japan's Sony Corp and Toyota Motor, respectively. Despite authorities' efforts, Asian currencies are expected to stay under pressure, as worries about Japan's nuclear crisis are likely to keep investors away from riskier assets.
The won hit a fresh 2-1/2-month low against the dollar earlier, weakening past option barriers at 1,140 by continuous sales by offshore players. The local currency slid as much as 1.2 percent against the dollar to 1,144.0, the weakest since December 29, slightly stronger than 1,145.4, the 61.8 percent Fibonacci retracement level of its December-February strengthening trend. The Philippine peso hit a 1-1/2-month low against the dollar as interbank players kept selling it on heightened risk aversion and the disaster in Japan. The peso weakened as much as to 0.6 percent to 44.01 per dollar, its weakest since February 3.