SINGAPORE: The Malaysian ringgit and the South Korean won led Asian currencies lower on Tuesday, Aug 10 as investors took profits from their recent rallies ahead of a Federal Reserve policy decision later in the day.
The ailing dollar rebounded against major currencies as investors awaited news on whether the Federal Reserve will start a new phase of quantitative easing as the U.S. economic recovery sputters.
RINGGIT
The Malaysian ringgit fell half of a percent to 3.157 per dollar against the broadly stronger dollar, but investors remained bullish on the currency.
"Dollar/ringgit is biddish today due to USD strength against majors. The market is covering short dollar positions ahead of the FOMC," said a trader in Kuala Lumpur, referring to the Fed policy committee meeting.
The Fed will issue a statement at 1815 GMT after the meeting.
The ringgit remains on course to test 3.128, a key chart level last hit in April 2008. A break of that will take ringgit to its highest since the Asian financial crisis.
The unit has gained 8.5 percent vs dollar so far this year, making it Asia's best performer, boosted by three central bank interest rate rises.
WON
The South Korean won fell 0.9 percent to 1,170.5 per dollar as investors covered short positions in the U.S. currency ahead of the Fed meeting.
Some dealers suspected Seoul's foreign exchange authorities of buying dollars to push down the won. Officials were not available for comment.
"If the Fed does not indicate anything on further easing, stocks will fall and the dollar may show some technical rebound. That will put pressure on the won," said an analyst at a futures firm.
Seoul shares <.KS11> lost half of a percent as foreign investors sold a net 5.4 billion won worth of stocks.
YUAN
One-month dollar/yuan NDFs erased all of Monday's losses and looked set to snap a three-day falling streak as investors covered short positions before the Fed decision.
"There is no percentage in shorting dollar/yuan NDFs on the day of the FOMC and we are seeing risk being taken off the table," said a senior trader at an Asian bank.
Reflecting the cautious sentiment, one-year NDFs now implied expected appreciation of only 1.1 percent from around 1.5 percent on Monday.
Volume has dropped due to the summer trading lull, with the bulk of activity concentrated on the 1-3 month tenors.
Spot yuan'' hovered near 6.7733 per dollar compared to the daily mid-point of 6.7745, which was weaker than Monday's fixing of 6.7685 .
BAHT
The Thai baht pulled back to 31.96 per dollar from a 26-week high hit on Monday, tracking its Asian peers. Traders have not detected any central bank presence in the market.
"It is basically profit-taking. Most people are shifting to square positions ahead of a long Thai weekend starting Thursday," a Bangkok-based dealer said, referring to Thai public holidays on Aug. 12-13 to mark Queen Sirikit's birthday.
Bank of Thailand Assistant Governor Suchada Kirakul said on Monday the baht had appreciated a little too fast and the central bank might need to intervene.
The baht has gained 4.3 percent so far this year. - Reuters
The ailing dollar rebounded against major currencies as investors awaited news on whether the Federal Reserve will start a new phase of quantitative easing as the U.S. economic recovery sputters.
RINGGIT
The Malaysian ringgit
"Dollar/ringgit is biddish today due to USD strength against majors. The market is covering short dollar positions ahead of the FOMC," said a trader in Kuala Lumpur, referring to the Fed policy committee meeting.
The Fed will issue a statement at 1815 GMT after the meeting.
The ringgit remains on course to test 3.128, a key chart level last hit in April 2008. A break of that will take ringgit to its highest since the Asian financial crisis.
The unit has gained 8.5 percent vs dollar so far this year, making it Asia's best performer, boosted by three central bank interest rate rises.
WON
The South Korean won fell 0.9 percent to 1,170.5 per dollar as investors covered short positions in the U.S. currency ahead of the Fed meeting.
Some dealers suspected Seoul's foreign exchange authorities of buying dollars to push down the won
"If the Fed does not indicate anything on further easing, stocks will fall and the dollar may show some technical rebound. That will put pressure on the won," said an analyst at a futures firm.
Seoul shares <.KS11> lost half of a percent as foreign investors sold a net 5.4 billion won worth of stocks.
YUAN
One-month dollar/yuan NDFs
"There is no percentage in shorting dollar/yuan NDFs on the day of the FOMC and we are seeing risk being taken off the table," said a senior trader at an Asian bank.
Reflecting the cautious sentiment, one-year NDFs now implied expected appreciation of only 1.1 percent from around 1.5 percent on Monday.
Volume has dropped due to the summer trading lull, with the bulk of activity concentrated on the 1-3 month tenors.
Spot yuan''
BAHT
The Thai baht
"It is basically profit-taking. Most people are shifting to square positions ahead of a long Thai weekend starting Thursday," a Bangkok-based dealer said, referring to Thai public holidays on Aug. 12-13 to mark Queen Sirikit's birthday.
Bank of Thailand Assistant Governor Suchada Kirakul said on Monday the baht had appreciated a little too fast and the central bank might need to intervene.
The baht has gained 4.3 percent so far this year. - Reuters
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