The Philippine peso rose on Wednesday on demand from macro funds and interbank speculators, while exporters helped support the South Korean won, though investors remained reluctant to buy emerging Asian currencies aggressively amid doubt over Europe's efforts to tackle its debt crisis.
Late in Asian market hours, European Commission President Jose Barroso said the region could issue jointly underwritten bonds once there was deeper economic integration among the 17 members. The comments lent some support to the euro. Still, investors remained sceptical over the region's efforts to solve its festering sovereign debt crisis.
Reflecting the lack of confidence, the Singapore dollar was unable to gain traction on Wednesday, while the Malaysian ringgit and the Thai baht failed to hold on to early gains. Emerging Asian currencies have been pressured by dollar-demand in non-deliverable forwards (NDFs) from offshore institutional investors, which in the past few weeks have rushed to hedge against further weakness in regional currencies.
Macro funds and interbank speculators chased the peso as it caught up to its regional peers. Manila's financial markets were closed due to a typhoon on Tuesday when Asian currencies rallied on demand from US investment banks and offshore funds. The Philippine currency is seen strengthening further on a technical basis, probably to a 200-day moving average of 43.32 per dollar, dealers said. The won ended choppy local trade on a firmer note as exporters such as shipbuilders chased it for end-month settlements.
The South Korean currency started the day firmer, but turned lower as investors added dollar positions on renewed worries about bond outflows after Franklin Templeton sold some of the country's bonds. The US fund manager sold about $171 million in South Korean bonds earlier this week, although it has not appeared to change its bullish view on the won currency, officials at Seoul's financial authorities said. The ringgit fell as real money funds and leveraged accounts sold the Malaysian currencies. Their sales triggered dollar-short squeezes around 3.1600 per dollar, also put pressure on the ringgit.