Asia FX up after Yellen, China PMI; rupiah hovers near 17-year low

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SINGAPORE (Feb 25): Most emerging Asian currencies rose on Wednesday after Federal Reserve Chair Janet Yellen suggested the U.S. central bank will not rush into raising interest rates, while Indonesia's rupiah hovered near 17-year lows.
    
Regional currencies gained as better-than-expected Chinese manufacturing activity eased some concerns over a slowdown in the world's second-largest economy.
    
The South Korean won and the Taiwan dollar advanced on exporter demand for month-end settlements. Malaysia's ringgit gained on short-covering.
    
Yellen said before the U.S. Senate Banking Committee on Tuesday that any modification of the Fed's forward guidance should not be read as an indication of interest rate hikes in a couple of meetings.
    
The comments defied expectations that she would provide a more specific time frame to revive prospects for higher U.S. borrowing costs as early as mid-year. Such expectations hurt most emerging Asian currencies earlier this week.
    
Adding to support for regional currencies, the flash HSBC/Markit Purchasing Managers' Index (PMI) for China inched up to a four-month high of 50.1 in February, beating market expectations.
    
"Asia FX could see some slight positives for a short term on the back of dollar reprieve from Yellen's comments and commodity currencies could see some upmove from the positive HSBC flash PMI," said Saktiandi Supaat, head of FX research for Maybank in Singapore.
    
Still, he had doubts about appreciation in the long term, saying "the dollar will continue to mildly go up ahead of the next FOMC."
    
The Chinese yuan failed to join the regional appreciation trend as the central bank fixed its daily mid-point weaker on the first trading day after the week-long Lunar New Year holidays.
    
RUPIAH
The rupiah started the day up 0.4 percent at a session high of 12,850 per dollar, tracking gains in regional peers, before retreating.
    
Foreign ownership of rupiah-denominated bonds rose to a record high in nominal terms this week, the finance ministry said.
    
The Indonesian currency gave up most of its earlier gains on increasing dollar demand from local companies for month-end payments.
    
The official Jakarta Interbank Spot Dollar Rate, which the central bank introduced in 2013 to manage exchange rate fluctuations, was fixed at 12,887 rupiah per dollar, weaker than the previous session's 12,866.
    
On Tuesday, the rupiah fell to 12,897 per dollar, the weakest since Dec. 16 when it hit 12,930, the lowest since August 1998.
    
WON
The won rose more than 1 percent as demand from exporters caused traders to dump dollar holdings to stop losses.
    
Traders had added long dollar positions earlier as importers bought the greenback and amid caution over possible intervention by South Korea's foreign exchange authorities to curb the won's strength.
    
TAIWAN DOLLAR The Taiwan dollar gained as sustained stock inflows lifted local shares.
    
The central bank was spotted intervening to limit the currency's upside, traders said.
    
Foreign investors bought a combined net T$73.1 billion ($2.3 billion) worth of shares in February by Tuesday, Taiwan Stock Exchange data showed. They were net buyers in the stock market in all trading days this month, the data showed.
    
    CURRENCIES VS U.S. DOLLAR
    Change on the day at 0510 GMT
  Currency    Latest bid   Previous day    Pct Move
  Japan yen       118.67         118.98       +0.26
  Sing dlr        1.3568         1.3573       +0.04
  Taiwan dlr      31.472         31.688       +0.69
  Korean won     1100.00        1109.90       +0.90
  Baht             32.56          32.57       +0.05
  Peso             44.16          44.34       +0.40
  Rupiah        12880.00       12895.00       +0.12
  Rupee            62.06          62.20       +0.22
  Ringgit         3.6220         3.6415       +0.54
  Yuan            6.2595         6.2551       -0.07
 
  Change so far in 2015
  Currency    Latest bid  End prev year    Pct Move
  Japan yen       118.67         119.66       +0.83
  Sing dlr        1.3568         1.3260       -2.27
  Taiwan dlr      31.472         31.718       +0.78
  Korean won     1100.00        1099.30       -0.06
  Baht             32.56          32.90       +1.06
  Peso             44.16          44.72       +1.27
  Rupiah        12880.00       12380.00       -3.88
  Rupee            62.06          63.03       +1.56
  Ringgit         3.6220         3.4965       -3.46
  Yuan            6.2595         6.2040       -0.89
  ($1 = 31.455 Taiwan dollars)