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EM ASIA FX-BOJ easing helps Asia FX rebound vs dlr; but down vs yen
January 22, 2013 / 8:14 AM / 5 years ago

EM ASIA FX-BOJ easing helps Asia FX rebound vs dlr; but down vs yen

* Philippine peso up on U.S. dlr local conversion
    * Sing dlr, won turn higher vs U.S. dlr
    * Indonesia corp dlr demand eases; some foreigners buy bonds

 (Adds text, updates prices)
    By Jongwoo Cheon
    Jan 22 (Reuters) - The Bank of Japan's bold policy easing
helped most emerging Asian currencies recoup their losses
against the dollar earlier on Tuesday as the steps are expected
to bring more funds to the region.
    But regional units weakened against the yen as the new
programme for additional purchases only comes into effect next
year and investors took some profits from an earlier period in
which these strengthened against the Japanese currency.
    Japan's central bank doubled its inflation target to 2
percent - as fully flagged - and made an open-ended commitment
to buy assets from next year, surprising markets that had
expected another incremental increase in its $1.1 trillion
asset-buying and lending programme. 
    Before the BOJ's decision, investors continued to reduce
long positions in regional units. But dealers and analysts said
the central bank's move should bolster inflows to the rest of
Asia, causing more investors to seek higher-yielding assets.
    "If we don't see any fresh risk-off factors, more liquidity
will support Asian currencies, although investors may take more
profits from rises against the yen, given its recent excessive
weakness," said Jeong My-young, Samsung Futures' research head
in Seoul.
    Emerging Asian currencies extended slides against the
Japanese currency after the BOJ's decision as the new programme
for additional asset purchases only comes into effect in 2014.
    But against the dollar, the Philippine peso 
gained on corporate demand. Investors bought the Thai baht
, the Malaysian ringgit and the Singapore
dollar, taking their recent falls as chances to add
them on dips.
    The South Korean won also found support from
stop-loss dollar selling.
    The peso was not a victim of initial regional profit-taking
thanks to local corporate demand to convert their dollar loans,
dealers said.
    The BOJ's easing is expected to keep supporting the peso,
they said.
    "Dollar's bear trend remains intact as dollar/peso failed to
close above 40.70," said a foreign bank dealer in Manila.
    In his view, the BOJ's easing steps will prompt more
investors to seek carry trades, which will strengthen the peso.
    "With the BOJ expected to weaken the yen further, it is
going to be likely that risk on trade would be the order of the
day as traders got back to its carry trade roots," said the
    But the peso is seen facing resistance around 40.50 per
dollar on potential intervention by the central bank to slow 
the currency's appreciation, he added.
    The won initially hit 1,067.9 per dollar, its weakest since
Dec. 28 as offshore investors, including proprietary trading
desks and leveraged accounts, covered short positions in the
dollar and the yen.
    Local interbank speculators added bullish bets on the
greenback, while importers joined the bids, dealers said.
    But the South Korean currency turned higher as investors
dumped dollar-long positions after the BOJ's decision. Exporters
also provided support.
    Meanwhile, the won eased 0.3 percent to 11.9043
against the yen as it has a major chart resistance at 11.6872,
its peak in April 2010.
    It may head to 12.0000-12.0500 to the Japanese currency.
    The Singapore dollar rose as investors took profits from
U.S. dollar-long positions that they had built from sub-1.2250
    Initially, the city-state's currency slid on selling from
leveraged accounts.
    The Singapore dollar eased 0.3 percent to 1.3735
against the yen.
    The rupiah's indicative spot prices slid 0.3
percent to 9,640 per dollar, while its traded levels were
9,735-9,780, dealers said.
    Dollar demand from local corporates continued to ease after
the government stopped state energy companies from buying
dollars on the open market.
    The Indonesian currency gained in forwards market with
one-month dollar/rupiah non-deliverable forwards 
down 0.2 percent to 9,748.
    "The huge dollar demand is not in the market anymore. If the
demand is gone, the rupiah will gain some more," said a
Jakarta-based dealer, referring to dollar bids from state energy
    With domestic dollar-demand easing, some foreign investors
bought Indonesian bonds, dealers said.
    The baht earlier fell as dollar demand from foreign banks
leveraged funds prompted local names to cover short positions in
the greenback.
    But the Thai currency recovered earlier losses as investors
kept buying the best performing emerging Asian currency this
year on dips.
    "Most people were waiting to sell dollars around 29.85,"
said a Thai bank dealer in Bangkok.
    The ringgit recovered most of its initial slide, which took
it to a two-week low, as investors bought it on weakness.
    Earlier, the unit touched 3.0465 to the dollar, its weakest
since Jan. 7 as model funds and leveraged accounts covered
dollar-short positions.
    However, investors are unlikely to chase the ringgit
aggressively, given concerns and weak local stocks ahead of 
    A Malaysian bank dealer in Kuala Lumpur said he was
reluctant to add long positions in the ringgit. The pending
election is "making some people reduce positions," he said.
    At 0755 GMT,  Malaysian stocks were down 0.65
  Change on the day at 0802 GMT
  Currency    Latest bid   Previous day    Pct Move
  Japan yen        89.14          89.62       +0.54
  Sing dlr        1.2264         1.2283       +0.15
  Taiwan dlr      29.065         29.070       +0.02
  Korean won     1061.90        1062.90       +0.09
  Baht             29.73          29.72       -0.03
  Peso             40.61          40.70       +0.22
  Rupiah         9650.00        9610.00       -0.41
  Rupee            53.65          53.77       +0.21
  Ringgit         3.0375         3.0363       -0.04
  Yuan            6.2211         6.2213       +0.00
  Change so far in 2013
  Currency    Latest bid  End prev year    Pct Move
  Japan yen        89.14          86.79       -2.64
  Sing dlr        1.2264         1.2219       -0.37
  Taiwan dlr      29.065         29.136       +0.24
  Korean won     1061.90        1070.60       +0.82
  Baht             29.73          30.61       +2.96
  Peso             40.61          41.05       +1.08
  Rupiah         9650.00        9630.00       -0.21
  Rupee            53.65          54.99       +2.50
  Ringgit         3.0375         3.0580       +0.67
  Yuan            6.2211         6.2303       +0.15
 (Additional reporting by IFR Markets' Catherine Tan; Editing by
Richard Borsuk)

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