April 9, 2013 / 8:33 AM / 5 years ago

EM ASIA FX-Baht at 16-yr high on Japan inflows; ringgit up on foreign bond demand

* European investors also buy baht, Thai bond yields lower
    * Thai cbank chief: worried about baht, but no steps planned
    * Ringgit at 3-mth high on bond, stock inflows
    * Won higher on stop-loss dlr selling; N.Korea tension caps

 (Adds text, updates prices)
    By Jongwoo Cheon
    SINGAPORE, April 9 (Reuters) - The Thai baht climbed to a
16-year high against the dollar on Tuesday and the Malaysian
ringgit hit a three-month high, spurred by expectations that
Japan's bold monetary easing will spur greater inflows into
their bond and stock markets.
    The South Korean won, battered by rising tensions
with North Korea, also regained some ground as offshore and
onshore investors covered short positions, seeing its recent
slide as excessive.
    The baht breached 29 to the dollar and rose as much
as 1.3 percent to 28.92, its strongest since 1997, according to
Thomson Reuters data.
    Offshore investors including those from Japan and Europe
bought the Thai currency, traders said.
    The ringgit gained up to 0.7 percent to 3.0370, the
strongest level since Jan. 23, on continuous bond inflows.
    "The market is waiting if Japanese are buying Asian bonds
because yields in Japan are too low," said a Malaysian bank
trader in Kuala Lumpur, adding Thailand, Malaysia and
Philippines are expected to benefit mostly from the Bank of
Japan's drastic easing.
    Malaysia's economy is expected to grow 5.3 percent this
year, while inflation is seen at 2.2 percent, the Asian
Development Bank said earlier on Tuesday. 
    The ADB predicted Thailand's 2013 economic growth at 4.9
percent with an inflation forecast of 3.2 percent.
    The trader said tensions between the two Koreas had hurt the
won but the outlook for the currency was strong.
    "People should avoid Korea due to a potential war. But when
things get normalised, Korea is the number one favourite," the
trader said.
    North Korea warned foreigners in South Korea on Tuesday to
leave due to the risk of war, raising tensions further on the
peninsula. 

    BAHT
    The baht gained as Thai bond yields slipped.
    The five-year government bond yield fell to 3.09
percent from 3.10 percent of Friday. The 10-year bond yield
 skidded to 3.50 percent from 3.52 percent.
    Bangkok financial markets were closed on Monday for a
holiday.
    The baht is emerging Asia's strongest currency this year on
capital inflows, having gained about 5.7 percent against the
dollar, according to Thomson Reuters data.
    Analysts said it can appreciate more because of "carry
trades" in which investors borrow cheap yen to put elsewhere to
seek higher yields.
    "Japan is relentless on QE and flush liquidity is looking to
invest somewhere," said a senior Thai bank trader in Bangkok,
referring to quantitative easing.
    "The baht may stall a bit around here. However, in the
medium-to-long term if the U.S., EU and Japan still keep their
QE and Thai fundamentals have not changed, I still see the baht
stronger," the trader said.
    Stock inflows also helped the baht to strengthen, traders
said. Foreign investors have poured money for a planned $2.13
billion initial offering of Bangkok SkyTrain operator BTS Group
Holdings Pcl. The IPO will be a record for Thailand.
 
    But local interbank speculators took some profits as the
baht is seen excessively bought and the central bank expressed
concerns over the baht's strength.
    "The baht's appreciation is too rapid and we are quite
concerned about it and will monitor it closely," Bank of
Thailand Governor Prasarn Trairatvorakul told reporters.
 
    The dollar/baht's 14-day relative strength index (RSI) stood
at 27.3, well below the 30-threshold. If the index is below that
threshold, the pair is technically seen as oversold.
    
    RINGGIT
    The ringgit gained on bond inflows and demand from custodian
banks for foreign stock buying, traders said.
    Malaysia has seen higher inflows after Prime Minister Najib
Razak called a long-waited general election earlier this month,
reducing some political uncertainty. 
    Some investors bet that the country's ruling coalition will
fare well in the election and it won't get a new government that
would change policies and priorities.
    The ringgit has gained 1.2 percent since April 3 when Najib
dissolved the parliament.
    Some traders and analysts said the Malaysian currency is
seen excessively bought with the dollar/ringgit's 14-day RSI at
22.4.
    "It won't be logical to make a new dollar/ringgit low before
we see greater clarity over the election result," said Sacha
Tihanyi, senior currency strategist for Scotiabank in Hong Kong.
    "But I still think a bullish ringgit position will be
profitable."
    
    WON
    The won started the local session weaker and hit an
eight-month low of 1,145.3 per dollar on escalating tension
between two Koreas.
    But the South Korean currency turned higher as offshore
funds' profit-taking from the dollar's strength caused stop-loss
selling of the greenback among interbank speculators. Some
exporters joined the bids, traders said.
    The dollar/won's 14-day RSI was at 75.2, above the
70-thresold, indicating the won is technically oversold.
    Still, investors stayed wary as North Korea warned
foreigners in South Korea to quit the country because they were
at risk in the event of conflict.
    The warning forced the won to give up most of earlier gains.
    "Investors are expected to reassess the won's (appreciation)
trend as the tension is prolonged, differently from the past
when we had just temporary events," said a foreign bank trader
in Seoul.
    Some investors still expect the won to appreciate in the
longer term due to the country's strong economic fundamentals.
    South Korea is seen as a major victim of a softer yen as it
hurts the country's export competitiveness in key overseas
markets against Japan.
    
  CURRENCIES VS U.S. DOLLAR
  Change on the day at 0720 GMT
  Currency    Latest bid   Previous day    Pct Move
  Japan yen        98.76          99.38       +0.63
  Sing dlr        1.2407         1.2421       +0.11
  Taiwan dlr      30.005         30.060       +0.18
  Korean won     1139.19        1140.10       +0.08
  Baht             28.96          29.30       +1.17
 *Peso             41.27          41.27       +0.00
  Rupiah         9725.00        9745.00       +0.21
  Rupee            54.52          54.56       +0.07
  Ringgit         3.0380         3.0590       +0.69
  Yuan            6.2029         6.2033       +0.01
 
  Change so far in 2013
  Currency    Latest bid  End prev year    Pct Move
  Japan yen        98.76          86.79      -12.12
  Sing dlr        1.2407         1.2219       -1.52
  Taiwan dlr      30.005         29.136       -2.90
  Korean won     1139.19        1070.60       -6.02
  Baht             28.96          30.61       +5.70
  Peso             41.27          41.05       -0.53
  Rupiah         9725.00        9630.00       -0.98
  Rupee            54.52          54.99       +0.86
  Ringgit         3.0380         3.0580       +0.66
  Yuan            6.2029         6.2303       +0.44
 * Financial markets in Philippines were closed for a holiday.

 (Additional reporting by Yena Park in SEOUL, Viparat
Jantraprapaweth in BANGKOK and IFR Markets' Catherine Tan;
Editing by Sanjeev Miglani)

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