Emerging FX-Asia gains on Fed rate views, peso at 2-week high
SINGAPORE, June 18 (Reuters) - Asian currencies extended their gains on Wednesday, led by the Philippine peso, as investors raised their long bets on regional currencies amid doubts over how much the Federal Reserve might raise interest rates this year.
Asian currencies were still finding support from recent weakness in the U.S. dollar. The latest blow for the U.S. dollar came on Tuesday with data showing U.S. housing starts fell to a 17-year low.
The Philippine peso PHP= firmed early to hit a two-week high at 44.05 per dollar, up about 0.4 percent from Tuesday's close. Traders suspected the central bank was intervening by buying dollars to smooth currency volatility.
"The dollar/peso is down because the U.S. dollar remains weak on the back of tempered expectations for U.S. interest rate hikes on account of a weak U.S. economy," a trader in Manila said.
"There is intervention, the BSP (central bank) is suspected to be buying dollar from 44.05 to 44.10," said the trader.
Central banks in the Philippines, South Korea, India and Indonesia had in recent weeks sold dollars to support their currencies out of fear that their weakness could stoke inflation.
Reports this week suggested market expectations for U.S. rate hikes this year had become too strong, leading investors to cut back on their expectations for a Federal Reserve rate rise in August. [ID:nN17614345]
The Chinese yuan CNY=CFXS gained a tenth of a percent to 6.8820 per dollar, its highest since the currency's revaluation in July 2005.
The yuan was guided to its high by the central bank, which set the currency's mid-point at a post-revaluation high for the second consecutive day.
Other currencies were firmer on the back of the yuan.
"Dollar/yuan signals, we think, will not deviate from the underlying bearish trend and this should help weigh on some of the regional pairings," said a Forecast research note.
The Malaysian ringgit MYR= rose 0.4 percent to a two-week high at 3.233 against the dollar, taking its gains so far this week to 1.3 percent.
The ringgit firmed in line with the Singapore dollar SGD=, which rose by a fifth of a percent to 1.3644 per U.S. dollar, its highest in just over a week. The Singapore dollar has gained a percent since Monday.
The Indonesian rupiah IDR= rose 0.2 percent to 9,280 and touched a one-month high. Dealers also suspected authorities intervened to buy dollars to cap the rise in the rupiah.
"The market has gone long rupiah with the uncertainty from the U.S. Fed in raising their interest rates, so the market prefers to go long on rupiah and buy SBI (Bank Indonesia Certificates)," said a trader in Jakarta.
"I think the range for the rupiah today will be 9,250 to 9,320," he said. CURRENCIES VS U.S. DOLLAR Change on the day at 0255 GMT Currency Latest bid Previous day Pct Move Japan yen 107.92 107.77 -0.14 Sing dlr 1.3656 1.3670 +0.10 Taiwan dlr 30.275 30.317 +0.14 Korean won 1022.10 1023.40 +0.13 Baht 33.08 33.14 +0.18 Peso 44.04 44.24 +0.45 Rupiah 9280.00 9301.00 +0.23 Rupee 42.89 42.89 +0.00 Ringgit 3.2400 3.2475 +0.23 Yuan 6.8824 6.8915 +0.13 Change so far in 2008 Currency Latest bid End prev year Pct Move Japan yen 107.92 111.33 +3.16 Sing dlr 1.3656 1.4382 +5.32 Taiwan dlr 30.275 32.443 +7.16 Korean won 1022.10 935.70 -8.45 Baht 33.08 33.68 +1.81 Peso 44.04 41.28 -6.27 Rupiah 9280.00 9390.00 +1.19 Rupee 42.89 39.41 -8.10 Ringgit 3.2400 3.3050 +2.01 Yuan 6.8824 7.3041 +6.13
(Reporting by Melissa Chia; Editing by Neil Fullick)
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