Asian currencies dipped broadly versus the dollar on Thursday as persistent worries about the eurozone's debt crisis deterred risky investments. The South Korean won lost roughly 0.7 percent against the dollar and the Indonesian rupiah shed 0.9 percent in the session, making them the region's biggest losers. Their peers were steady to lower on the day.
Market players have been reluctant to chase Asian currencies higher and are cautious about their outlook for coming months due to concerns about the impact of the eurozone's debt crisis on Asian economies. Still, some market players do seem to be betting that emerging Asian currencies will head higher against the euro, said Rob Ryan, FX strategist for BNP Paribas in Singapore.
One factor that may be encouraging such bets is the possibility that China may adopt further monetary stimulus to support its economy, such as reducing the ratio of deposits banks are required to keep as reserves, Ryan said. Although the Singapore dollar has dropped 1.1 percent versus the US dollar so far in December, it has climbed roughly 1.7 percent against the euro.
The dollar edged up 0.3 percent versus the Thai baht to 31.32, hovering near a 15-month high of 31.44 touched in late November. A trader at a Japanese bank in Singapore said that recent demand for baht related to corporate capital injections had ebbed for now, adding that dollar/baht has been supported recently by dollar demand from Thai importers. The Indonesian rupiah led the drop in Asian currencies on Thursday, falling 0.9 percent versus the dollar. Corporate demand for the dollar helped weigh on the rupiah, traders said.