Asian currencies fell, led by South Korea’s won, on speculation regional central banks will intervene to stem rallies this year that risk hurting a recovery in exports. The won, Philippine peso and Indonesian rupiah all strengthened to the highest levels in at least 15 months yesterday after China reported.
A rebound in overseas sales, bolstering the outlook for global trade. Technical indicators that traders use to predict exchange-rate movements signaled the dollar was poised to climb against Asian currencies. “The market has turned a bit cautious with talk that some regional central banks are intervening” to prevent appreciation, said Suresh Kumar Ramanathan, a foreign-exchange strategist at CIMB Investment Bank Bhd. in Kuala Lumpur. “The moves yesterday were too fast for most regional currencies.”
The won weakened 0.6 percent to 1,126.35 per dollar as of 11:43 a.m. in Seoul, according to data compiled by Bloomberg, after yesterday reaching 1,117.40, the strongest level since September 2008. Malaysia’s ringgit slid 0.3 percent to 3.3465 and the rupiah fell 0.4 percent to 9,183.
The dollar’s 14-day relative strength index against the won, a comparison of the magnitude of gains and losses, was 31 after reaching 24 yesterday, Bloomberg data shows. The reading was at or below 30 for the ringgit and the rupiah. A level below 30 signals the U.S. currency may reverse direction.
Won ‘Consolidation’ Policy makers can try to influence exchange rates by arranging sales or purchases of currencies. The Bank of Korea on Jan. 8 said it was “closely” monitoring the won. The Bank of Thailand will curb excessive moves in the baht “if necessary,” Governor Tarisa Watanagase said last week.
Korea’s won is the best-performing currency in Asia so far this year, rising 2.7 percent and adding to an 8.9 percent gain in 2009.
“We’ve had quite a big move since the start of the year; I think 1,120 was the area we were targeting on the trading desk and we saw quite a lot of selling yesterday,” said Gerrard Katz, head of foreign-exchange trading at Standard Chartered Plc in Hong Kong. “There was talk of intervention around 1,120 as well. It looks like we probably just consolidated in the short term.”
The won will lead declines in Asian currencies from the second quarter as the end of economic stimulus spending slows global growth, according to SJS Markets Ltd., the most-accurate forecaster of 2009’s rally in India and Taiwan’s currencies. ‘Double-Dip’
Investors will become more concerned about a double-dip in the U.S., European and Japanese economies, spurring a flight of capital from emerging markets, said Dariusz Kowalczyk, chief investment strategist at SJS in Hong Kong. Consumer spending won’t make up for the winding back of fiscal measures given the loss of jobs, and the currencies that’ll “suffer the most are the ones that are most freely floating,” such as the won and Indonesian rupiah, he said.
“Emerging markets will not do well in the second half,” Kowalczyk, 38, said in an interview yesterday. “Policy makers don’t have a good track record. The next round of stimulus will be too little, too late.” The ringgit pared yesterday’s 1.2 percent advance, the biggest in more than seven months, after the government reported an unexpected drop in factory output. Factory Output
The Philippine peso dropped 0.4 percent to 45.74 per dollar in Manila, even after the government said overseas sales climbed 5.1 percent in November, beating forecasts in a Bloomberg survey for a 2 percent increase. The currency retreated on speculation importers took advantage of recent gains to settle import bills.
“What we are seeing is a correction,” said Marcelo Ayes, senior vice president at Rizal Commercial Banking Corp. in Manila. “Those who have to settle import bills or overseas debts are also buying dollars since it is now cheaper.” Elsewhere in Asian trading, Singapore’s dollar fell 0.2 percent to S$1.3909 and Taiwan’s dollar was little changed at NT$31.77. China’s yuan traded at 6.8270 from 6.8264 yesterday.