SINGAPORE, Oct 21: Most emerging Asian currencies eased on Monday as investors took profit after last week’s gains despite growing expectations the US Federal Reserve may have to keep its monetary stimulus longer due to the impact of a government shutdown.
The Indian rupee underperformed on dollar bids from private oil companies. Indonesia’s rupiah fell on month-end dollar demand from domestic companies.
The Malaysian ringgit slid as investors cut long positions amid caution before the country’s 2014 budget on Friday, while commercial dollar demand hurt the Thai baht .
The dollar stayed around an 8-month low against a basket of currencies amid views that the Fed will postpone dialing back its bond-buying programme after a 16-day government shutdown.
‘A sluggish dollar is positive for Asian FX. But risks to the U.S. Economy and consequently global economy will weigh on risk sentiment, which offsets the lift from a weaker dollar,’ said Andy Ji, Asian currency strategist for Commonwealth Bank of Australia in Singapore.
‘In addition, there is still risk of an earlier than expected tapering or shifting expectations based on better than expected U.S. Economic data,’ Ji said.
Investors are awaiting September U.S. Payrolls due on Tuesday with forecasts of a job gain of 180,000, although the data will shed little light on the impact of the policy paralysis in Washington.
A majority of market players now expect the Fed will begin reducing stimulus next year, though some analysts believe tapering of its bond-buying programme is still possible in December.
Such expectations helped most emerging Asian currencies rise last week.
RUPIAH
The rupiah fell on month-end dollar demand from local companies and after foreign investors were net sellers in Indonesian stocks in the previous straight sessions.
The forward onshore market, or Jakarta Interbank Spot Dollar Rate (JISDOR), was fixed at 11,353 per dollar, compared with Friday’s 11,308.
Some local banks and state-run lenders sold dollars, limiting the rupiah’s downside.
Still, the Indonesian currency is likely to stay under pressure from increasing dollar bids from domestic companies, traders said.
‘Corporate demand will provide support to the dollar until next week,’ said a Jakarta-based trader, adding the rupiah was expected to trade between 11,350 per dollar and 11,400.
RINGGIT
The ringgit slid as investors reduced bullish bets against both the U.S. Dollar and the Singapore dollar.
On a daily chart, the Malaysian currency is seen facing a resistance line at 3.1468 to the greenback, the 50.0 percent Fibonacci retracement of its weakness between May and August.
Against the neighbouring city-state’s currency, the Malaysian currency eased as much as 0.4 percent to 2.5563.
Investors are keeping an eye on Malaysia’s next fiscal budget due on Friday.
‘MYR has done surprisingly well of late and is not pricing in much risk of fiscal disappointment in the interim, which leaves the ringgit exposed to the downside under a market stress event,’ Scotiabank said in a note.
Prime Minister Najib Razak won internal voting for top posts in the ruling party at the weekend but at a cost to his reform agenda.
WON
The won eased on dollar demand from South Korean importers amid sustained caution over possible intervention by the foreign exchange authorities to stem its strength.
Still, the South Korean currency found relief as foreign investors were set to extend their buying spree in Seoul shares to a record 37th consecutive session.
(agencies)
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