Rupiah leads Asia FX losses as Ukraine woes keep investors defensive: Reuters Most emerging Asian currencies eased on Tuesday as mounting tensions in Ukraine kept investors away from riskier assets and as the Chinese yuan extended losses on the central banks guidance. The Indonesian rupiah led losses among regional units as investors took profits on the best performing Asian currency of the year after disappointing trade data. South Koreas won fell on selling from offshore funds. The Philippine peso also eased on risk aversion. Asian stocks stayed under pressure as Russia tightened its grip on Crimea, with Ukraines acting president saying Russias military presence was growing. The United States said any such threat would be a dangerous escalation and the European Union threatened unspecified targeted measures. OCBC Bank expected emerging Asian currencies to stay weak against the dollar due to softer regional stocks. To this end, expect the PHP, INR, MYR, and KRW to remain relatively more sensitive to dollar/risk appetite dynamics, the bank said in a client note, referring to the peso, the Indian rupee, the Malaysian ringgit and the won. RUPIAH The rupiah fell as local banks continued to cut bullish bets after Indonesia reported a unexpected trade deficit in January. The Indonesian currency eased in overnight non-deliverable forwards (NDFs) markets. Credit Agricole CIB said it was closing long positions in the rupiahs one-month NDFs versus the dollar. The Crimea crisis poses short-term downside risks to EM FX, especially for currencies relying on portfolio flows to fund external deficits, such as the IDR, it said in a client note. Still, some local traders hesitated to add dollar holdings as the government aims to sell 10 trillion rupiah ($863 million) in bonds later in the day. Indonesias annual inflation eased to 7.75 percent in February, slower than the central banks forecast and a market forecast in a Reuters poll. The rupiah has been the best performing Asian currency so far this year on smaller current account shortfalls and slower inflation. WON The won edged lower on dollar demand from offshore funds and domestic importers. Local exporters, however, bought the South Korean currency for settlements, limiting its downside, traders said. Around 1,070, views were mixed. It is difficult to take a direction as exporters offset bearish factors (for the won), said a South Korean bank trader in Seoul, referring to the wons value to the won. PHILIPPINE PESO The peso eased as worries about Ukraine kept risk sentiment subdued. Some local investors bought the Philippine currency on dips to hedge inflows, traders said. Despite such demand, the peso is likely to stay weak, given escalating geopolitical tensions in the Eastern Europe and strong U.S. economic data, traders said. U.S. factory activity rebounded last month and consumer spending increased more than expected in January, suggesting the worlds largest economy was regaining some strength after abruptly slowing in recent months.
Posted on: Tue, 04 Mar 2014 05:30:00 +0000
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