SINGAPORE: Most emerging Asian currencies fell on Wednesday as the European debt crisis deepened with Spain's borrowing costs surging and Greece unlikely to meet conditions of its aid package, while a weaker Chinese yuan put further pressure on regional units.
Offshore funds sold the South Korean won and stock outflows hit the Taiwan dollar. The Philippine peso slid after data showed the country's trade deficit in May more than tripled.
The Chinese yuan touched a 10-month low against the dollar after the central bank set its weakest fixing for the local unit in eight months, denting sentiment in its Asian peers.
Any form of weakness in the yuan will be translated into the rest of Asia ex-Japan FX. The question is how much currency weakness they can absorb, said Suresh Kumar Ramanathan, head of regional interest rate and FX strategy at CIMB Investment Bank in Kuala Lumpur.
Without a greater signal of monetary easing from the Fed, we expect that Asia will continue to find difficulty in clawing back ground so long as EUR remains under pressure, said Sacha Tihanyi, senior currency strategist for Scotiabank in a note, referring to the Federal Reserve's meeting next week.
The won fell on selling by offshore funds, which some dealers said appeared to prompt stop-loss selling among interbank players.
But the South Korean currency recovered some of its earlier losses as local exporters took falls as chances to buy it on dips for month-end settlements and interbank speculators chased the unit when it was weaker than 1,150 per dollar, dealers said.
That caused squeezes in short won positions among some offshore funds, they added.
Investors were looking to add long bets on the won against the euro, limiting downside in the local unit to the greenback, dealers said.
The won eased 0.5 percent versus the euro for the day after on Tuesday hitting 1,383.13, the strongest since February 2008.
It is difficult for the won to ignore a global economic slowdown. But the won's fundamentals are not that negative and it will keep decoupling the euro's move. Investors will keep buying the won against the euro, said Jeon Seung-ji, a currency analyst at Samsung Futures in Seoul.
The Taiwan dollar slid on stock outflows and foreign investors sold the island's currency in active trading, dealers said. The local unit found some relief as domestic exporters bought it for month-end settlements, especially when it was softer than 30.20 per dollar.
The central bank was spotted smoothing the currency's fluctuation, but its intervention was mild, dealers added.
Foreign investors sold a combined net T$51.7 billion ($1.72 billion) during the first 24 days of July.
The rupiah weakened in thin trading to touch 9,500 per dollar, the level which the Indonesian central bank has been seen defending.
Local banks bought the dollar, while Bank Indonesia was spotted selling the greenback through state-run banks, dealers said.
Offshore funds sold the South Korean won and stock outflows hit the Taiwan dollar. The Philippine peso slid after data showed the country's trade deficit in May more than tripled.
The Chinese yuan touched a 10-month low against the dollar after the central bank set its weakest fixing for the local unit in eight months, denting sentiment in its Asian peers.
Any form of weakness in the yuan will be translated into the rest of Asia ex-Japan FX. The question is how much currency weakness they can absorb, said Suresh Kumar Ramanathan, head of regional interest rate and FX strategy at CIMB Investment Bank in Kuala Lumpur.
Without a greater signal of monetary easing from the Fed, we expect that Asia will continue to find difficulty in clawing back ground so long as EUR remains under pressure, said Sacha Tihanyi, senior currency strategist for Scotiabank in a note, referring to the Federal Reserve's meeting next week.
The won fell on selling by offshore funds, which some dealers said appeared to prompt stop-loss selling among interbank players.
But the South Korean currency recovered some of its earlier losses as local exporters took falls as chances to buy it on dips for month-end settlements and interbank speculators chased the unit when it was weaker than 1,150 per dollar, dealers said.
That caused squeezes in short won positions among some offshore funds, they added.
Investors were looking to add long bets on the won against the euro, limiting downside in the local unit to the greenback, dealers said.
The won eased 0.5 percent versus the euro for the day after on Tuesday hitting 1,383.13, the strongest since February 2008.
It is difficult for the won to ignore a global economic slowdown. But the won's fundamentals are not that negative and it will keep decoupling the euro's move. Investors will keep buying the won against the euro, said Jeon Seung-ji, a currency analyst at Samsung Futures in Seoul.
The Taiwan dollar slid on stock outflows and foreign investors sold the island's currency in active trading, dealers said. The local unit found some relief as domestic exporters bought it for month-end settlements, especially when it was softer than 30.20 per dollar.
The central bank was spotted smoothing the currency's fluctuation, but its intervention was mild, dealers added.
Foreign investors sold a combined net T$51.7 billion ($1.72 billion) during the first 24 days of July.
The rupiah weakened in thin trading to touch 9,500 per dollar, the level which the Indonesian central bank has been seen defending.
Local banks bought the dollar, while Bank Indonesia was spotted selling the greenback through state-run banks, dealers said.
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