Foreign investors have been net buyers of Korean stocks for 10 consecutive days -- the longest streak since October 2010 -- and have purchased Indian shares for the past four days, showing resilience despite Japan's nuclear crisis and military conflict in Libya, among other risks that have materialised or resurfaced in the past month.
"From a sluggish USD and positive risk mood, USD/Asia ex Japan is going to stay heavy. There are good opportunities to pick up positive carry from short NDF (non-deliverable forward) positions," said Andy Ji, Asian currency strategist and economist at Commonwealth Bank of Australia in Singapore.
Ji recommended being overweight the won, Malaysia ringgit, Philippine peso and Indonesian rupiah.
He said the won and the peso were fundamentally undervalued, and added the ringgit and the rupiah were less sensitive to general risk sentiment to equity flows. Malaysia and Indonesia are also commodity exporters.
WON
The won ended local trading around 1,110.0 per dollar, level traders said monetary authorities had been defending since early February. It later rose to around 1,109.70.
Despite heightened caution over possible intervention to check the speed of the won's rise, foreign exchange authorities were not spotted buying dollars, dealers said.
That caused investors to cut dollar-long positions and trip stoplosses, as investors had expected the authorities to prevent the won from strengthening past 1,110 per dollar, especially after they were spotted buying dollars on Friday to weaken it to levels around 1,114, dealers said.
On Friday, the authorities were spotted buying dollars, especially in the minutes before the local market closed, sending the won from 1,112.6 to 1,114, dealers said.
RUPEE
The Indian rupee climbed, helped by firmer domestic shares driven by foreign fund inflows, but oil import payments kept a lid on the gains, traders said.
The main stock index rose for the sixth session as investors chased bargains after a disappointing performance since the start of January.
Foreign institutional investors had bought $879.16 million worth of shares from March 1-28, lowering net sales to $1.3 billion in the year to date.
Traders said there was some demand for dollars from oil refiners who make their import payments at the close of each month. India imports more than two-thirds of the oil it consumes and the refiners are the biggest buyers of dollars in the forex market.
PESO
The peso erased most of its earlier losses, tracking gains in its Asian peers and as dollar-shot covering petered out.
"It looks like the short-covering is over now. Now market is doing a sell on rally (in dollar/peso) move," said a Manila-based dealer.
Earlier, dollar/peso rose to as high as 43.60 on dollar demand from importers and as investors covered dollar-short positions.
Expectations for further policy tightening by the central bank have supported the peso so far this year. However, the central bank was spotted buying dollars to defend 43.30 in March, dealers have said, triggering some dollar short covering.