The Singapore dollar hit a fresh record high on Thursday as investors chased higher-yielding and riskier assets, while the South Korean won rose to a 32-month peak despite an estimated $2-billion intervention by foreign exchange authorities. Emerging Asian currencies also found support from strong stock markets and a broadly weak dollar, with the Malaysian ringgit hitting a 14-year high and the Indonesian rupiah touching a seven-year high.
Apart from South Korea, other regional foreign exchange authorities also have been spotted buying dollars in recent sessions to check gains in their currencies, but the moves are unlikely to halt their bullish trend, analysts and dealers said. Asian central banks also buy the euro with dollars from intervention, helping to buoy the European single currency, which will eventually support Asian currencies.
Hedge funds boosted the won to a fresh 32-month high against the dollar, despite dollar buying by authorities and news that the government may reduce ceilings on bank's currency derivatives as early as next month, a move widely seen as aimed at taming the currency's rally.
Authorities said in a joint statement that banks' forex derivatives positions would be inspected from next week. The moves kept the South Korean currency weaker than 1,080 per dollar, but it still ended 0.3 percent higher on the day. The Singapore dollar hit a fresh record high and the Indonesian rupiah touched a seven-year peak on little sign of intervention by their central banks. The Singapore dollar strengthened to as firm as 1.2346 versus the greenback.
The rupiah rose to 8,610 per dollar, the strongest since April 2004, on inflows to Indonesian stocks and bonds. The ringgit hit a fresh 14-year high against the dollar on interbank speculators' demand. The Malaysian currency strengthened to as firm as 3.0040, the strongest since September 1997. The Taiwan dollar rose to its highest in more than two months on foreign buying and a rally in local stocks.