Won bolts to 7wk high on for­eign­ers stock buy­ing

In­done­sia ex­pected to de­fend level of 8,705 ru­piah vs dlr

The Financial Daily - - MONEY & FOREX -

SIN­GA­PORE: Hedge funds piled into the won on Wed­nes­day, lift­ing it to a seven-week high against the dol­lar and sug­gest­ing the South Korean cur­rency may lead other Asian cur­ren­cies higher in the sec­ond quar­ter with for­eign equity flows to the re­gion ex­pected to re­main solid.

The won climbed to as high as 1,103.90 per dol­lar in lo­cal trade as the sur­pris­ing ab­sence of in­ter­ven­tion by Korean authorities caused macro funds and other in­vestors to bail out of short won po­si­tions, ac­cel­er­at­ing the up­ward move.

The won's rise stood out on the day, with many other emerg­ing Asian cur­ren­cies rel­a­tively steady. Yet with re­gional equity mar­kets re­flect­ing strength from for­eign in­flows, other cur­ren­cies may fol­low the won higher.

The won ended lo­cal trade at 1,104.2, the strong­est close since late April 2010. It is on track to be the third-best per­form­ing emerg­ing Asian cur­rency in the first quar­ter, up 2.8 per cent.

Af­ter the lo­cal closed, it strength­ened fur­ther to 1,101.6, the firmest level in off­shore trade since Feb 9.

A lack of in­ter­ven­tion boosted views that South Korea's for­eign ex­change authorities may al­low more ap­pre­ci­a­tion in the won to fight in­fla­tion.

In­done­sia's cen­tral bank was again spot­ted check­ing the ru­piah's gains, deal­ers said, though up­ward pres­sure on the ru­piah from off­shore play­ers may end up drag­ging the pair to­ward 8,705 in the medium term.

"It is stuck be­cause the cen­tral bank keeps in­ter­ven­ing to sup­port USD/IDR, so it doesn't break the 8,705 level. But flows are com­ing, bet­ting on the IDR's fur­ther strength due to in­flows from com­modi­ties ex­ports and lower in­fla­tion fig­ures for March," said a Jakartabased dealer.

Stan­dard Char­tered rec­om­mended us­ing the baht as a fund­ing cur­rency to buy other emerg­ing Asian cur­ren­cies such as the ring­git and ru­piah.

The baht has lost 0.53 per cent so far this year, be­com­ing the worst per­form­ing cur­rency among emerg­ing Asian units. - Reuters

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