SINGAPORE, Nov 5: The Taiwan dollar rose on stock inflows on Tuesday, leading other most other emerging Asian currencies in recovering ground after the U.S. Federal Reserve said it was in no hurry to taper its monetary stimulus, but political tensions in Thailand hurt the baht.
The Indian rupee also eased due to catch-up selling after a holiday on Monday.
Emerging Asian currencies found some relief on Tuesday after key Fed officials said the U.S. Central bank is in no rush to begin cutting its bond-buying programme.
In the previous session, regional units extended slides on expectations that the U.S. Federal Reserve may start scaling back its stimulus this year following the release of encouraging economic data.
‘Asian currencies would also be beholden to eventual taper-induced greenback resilience,’ OCBC Bank said in a client note.
‘However, we are also cognizant of the fact that if the Asian recovery gains sufficient traction in the coming quarters, the regional units may begin to contemplate further resistance to broad dollar dynamics.’
Growth in China’s service sector edged up in October, a private survey showed, indicating further stabilisation in the world’s second-largest economy.
Investors hesitated to build up large positions in emerging Asian currencies, partly due to caution ahead of the European Central Bank meeting on Thursday and U.S. October jobs data due on Friday.
TAIWAN DOLLAR
The Taiwan dollar rose as foreign financial institutions bought Taiwanese stocks on dips in the market .
Foreign investors purchased a combined net T$4.75 billion $161.5 million) in the previous two consecutive sessions.
Some of the inflows to Taiwan came from an Abu Dhabi sovereign wealth fund, according to the island’s newspapers.
The Taiwan central bank was not seen intervening to stem the local currency, but could push it lower at the close, traders said.
BAHT
Offshore funds solde the Thai baht due to concerns that political tensions could boil over as the government tries to push through an amnesty bill that could herald the return of former premier Thaksin Shinawatra from self-exile.
The Thai currency found support at a 100-day moving average level of 31.333 per dollar, but remained under pressure due to the political uncertainties, traders and analysts said.
‘We are bearish THB and target 31.30 by the end of the year, but note that our bearish view certainly allows for the risk of an overshoot of our end of year target, particularly if political tensions intensify,’ Scotiabank said in a client note.
A senior Thai bank trader in Bangkok said the baht may weaken to 31.50 if protests against the bill turn violent.
(agencies)
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