SINGAPORE, Aug 6: The Singapore dollar and the Malaysian ringgit edged up on Tuesday as investors further reduced bearish bets on weakened views that the Federal Reserve may start scaling back its stimulus, while most emerging Asian currencies barely changed.
The Indian rupee weakened to within touch of a record low, pressuring bonds, although caution over potential intervention to support the currency limited its downside.
The Singapore dollar advanced on demand from leveraged funds. The ringgit gained as Malaysian government bond yields fell.
The U.S. Dollar slid further as data showed on Friday that U.S. Employers slowed the pace of hiring in July, raising expectations that the Fed may wait until late this year before reducing its bond-buying programme.
‘If the dollar continues to lose traction globally, Asian currencies may continue to reclaim lost ground, given also that the net portfolio inflow environment has continued to improve in recent sessions,’ OCBC Bank said in a client note.
Still, emerging Asian currencies’ gains were limited as some traders stayed cautious over the Fed’s possible tapering and on weaker regional stocks.
Dallas Fed President Richard Fisher said on Monday the U.S. central bank is nearer to dialing back its quantitative easing after the unemployment rate dropped last month.
Investors were awaiting the Australian central bank’s monetary policy decision later in the day. The Reserve Bank of Australia is considered almost certain to cut rates a quarter point to 2.5 percent.
SINGAPORE DOLLAR
Leveraged funds lifted the Singapore dollar, but investors hesitated to push the currency higher than 1.2640 to the U.S. dollar, traders said.
Based on the charts and technical factors, traders said the greenback will find a trendline support around the level.
‘Everybody is looking to buy the U.S. Dollar there,’ said a foreign bank trader in Singapore.
For more gains in the Singapore dollar, it needs to strengthen past the 1.2630-1.2640 level first and clearly breach 1.2600, the trader said.
‘But nobody expects that for the time being,’ he added.
RINGGIT
The ringgit edged up in thin trading as 10-, five- and three-year bond yields slid.
But foreign funds were waiting to buy dollars around 3.2200, limiting the ringgit’s upside, traders said.
‘Since last week’s NFP, timing of U.S. Tapering is in doubt,’ said a senior Malaysian bank trader in Kuala Lumpur, referring to the July U.S. Nonfarm payrolls, which were weaker than market expectations.
The ringgit is seen still having room to strengthen to 3.2100, but it needs to clear 3.2200, he added.
WON
The won earlier gained on exporters’ demand for settlements and stop-loss dollar selling.
The South Korean currency, however, turned slightly lower on caution over possible intervention by the foreign exchange authorities. Traders also stayed wary of the Fed’s potential policy shift.
‘The won is unlikely to break the 1,110 level soon. We still have uncertainties over the U.S.,’ said a senior foreign bank trader in Seoul.
CURRENCIES VS U.S. DOLLAR
Change on the day at 0350 GMT
Currency Latest bid Previous day Pct Move
Japan yen 98.00 98.28 +0.29
Sing dlr 1.2664 1.2688 +0.19
Taiwan dlr 29.946 29.950 +0.01
Korean won 1114.55 1113.80 -0.07
Baht 31.37 31.33 -0.13
Peso 43.52 43.47 -0.11
*Rupiah 10280.00 10280.00 +0.00
Rupee 61.11 60.88 -0.38
Ringgit 3.2280 3.2315 +0.11
Yuan 6.1234 6.1247 +0.02
Change so far in 2013
Currency Latest bid End prev year Pct Move
Japan yen 98.00 86.79 -11.44
Sing dlr 1.2664 1.2219 -3.51
Taiwan dlr 29.946 29.136 -2.70
Korean won 1114.55 1070.60 -3.94
Baht 31.37 30.61 -2.42
Peso 43.52 41.05 -5.68
Rupiah 10280.00 9630.00 -6.32
Rupee 61.11 54.99 -10.01
Ringgit 3.2280 3.0580 -5.27
Yuan 6.1234 6.2303 +1.75
* Financial markets in Indonesia are closed this week for holidays.
(agencies)
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