SINGAPORE, Oct 22: Most emerging Asian currencies fell on Tuesday as investors awaited US jobs data for clues on whether the Federal Reserve will start scaling back its stimulus this year.
The Malaysian ringgit also slid as investors cut bullish bets abead of the country’s 2014 budget on Friday.
The Philippine peso eased as investors reduced long positions in case US September payrolls number due later in the day is stronger than expected.
U.S. Non-farm payrolls are expected to have increased 180,000 last month with the jobless rate steady at 7.3 percent, according to a Reuters poll.
A positive surprise in the jobs data could lift the dollar and put more pressure on emerging Asian currencies, analysts and traders said.
Still, analysts say any rise in the dollar on an upside surprise could be limited, since the September jobs data will shed little light on the economic impact of this month’s U.S. government shutdown.
The closure increased expectations that the Fed may keep its bond-buying programme in place longer, helping most emerging Asian currencies appreciate.
‘A stronger figure is unlikely to change views that the Fed may taper sooner with some expectations of its policy shift in March,’ said Yuna Park, a currency and bond analyst at Dongbu Securities in Seoul.
‘Asian currencies are seen strengthening a bit more in the fourth quarter unless the dollar sees a big rebound,’ Park added.
Chicago Federal Reserve President Charles Evans told CNBC television in an interview that it will be ‘tough’ for the Fed to have sufficient confidence in the strength of the U.S. Recovery by its December meeting to start scaling back its stimulus.
RINGGIT
The ringgit fell against both to the U.S. Dollar and the Singapore dollar as investors continued to trim long positions in the Malaysian currency before the budget.
Prime Minister Najib Razak will trim the government’s hefty subsidy bill and likely announce a new consumption tax as he delivers a budget seen as crucial to ward off a possible credit downgrade and reassure investors over the country’s fast-growing debt burden.
But the budget is unlikely to make drastic cuts to subsidies that take up about a fifth of government spending, or include deeper reforms such as reducing a bloated, but politically influential, civil service.
The ringgit later pared some of earlier losses, while the three-year government bond yield dipped to 3.151 percent, the lowest since June 11.
PHILIPPINE PESO
The peso eased as investors covered short positions in the dollar before the U.S. Jobs data.
A senior Philippine bank trader said the peso may weaken to 43.40 per dollar if the U.S. Payroll number is stronger than expected.
Still, the Philippine currency found relief from exporters’ demand, while government bond yields slid.
The three-year bond yield fell to 2.492 percent, the lowest since Aug. 15. Ten- and five-year yields also slid.
WON
The South Korean won turned higher as exporters’ month-end demand prompted short squeezes.
Foreign investors were set to extend their buying spree in Seoul’s main stock market to a record 38th consecutive session.
The won started the local session weaker on selling from offshore funds amid growing caution over possible intervention by the foreign exchange authorities to stem its appreciation.
‘They will defend until exporters’ deals intensify,’ said a senior foreign bank trader in Seoul.
(agencies)
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