Asian currencies mixed, support emerges on improved risk sentiment

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SINGAPORE (Dec 22): Asian currencies were broadly mixed versus the dollar on Monday, although underlying improvement in risk sentiment supported some units, with the South Korean won climbing on year-end position squaring.
    
The Philippine peso edged higher, helped by strong year-end remittance inflows from overseas Filipino workers.
    
The Malaysian ringgit was an underperformer, pressured by dollar-buying by interbank speculators and local market participants.
    
Market sentiment toward emerging market currencies had soured in the early part of last week after sliding oil prices triggered volatility across a variety of assets and as a plunge in the Russian rouble spooked investors.
    
However, an upbeat economic assessment by the U.S. Federal Reserve at last week's policy review helped calm market nerves, while the mood has also improved as oil prices and the rouble bounced from their recent troughs.
    
Still, market participants were cautious on the outlook for Asian currencies.
    
A trader for a Malaysian bank in Kuala Lumpur said there had been some dollar-buying for Asian currencies on Monday, adding that "nobody" wanted to be short the dollar.
    
Most emerging regional currencies have fallen against the dollar this year, as the greenback rose on the back of market expectations for the Fed to start raising interest rates some time next year.
    
The dollar is expected to maintain its broad strength against Asian currencies over the next several months, said Leong Sook Mei, ASEAN head of global markets research for the Bank of Tokyo-Mitsubishi UFJ in Singapore.
    
"We still have a dollar/Asia upside profile for at least all of the way to the middle of next year," Leong said.
    
Still, a recovery in the U.S. economy will be positive for Asian economies, she said, adding that Asian currencies may find some support as a result.
           
SINGAPORE DOLLAR
    
A lower Chinese yuan and corporate buying of the U.S. dollar helped drag the Singapore dollar.
    
Data due on Tuesday is expected to show that Singapore's year-on-year headline inflation rate turned negative for the first time in five years due partly to sliding oil prices, and a few economists see scope for the central bank to ease tight monetary policy to support economic growth.
    
Most economists still expect the Monetary Authority of Singapore (MAS) to stick to its tight policy stance at its next policy review in April as the labour market remains tight and core inflation is expected to stay relatively firm.
    
In October, the MAS maintained its policy of "modest and gradual" appreciation of the Singapore dollar and kept all related policy settings unchanged.

    CURRENCIES VS U.S. DOLLAR
 
                                                       
  Change on the day at   0457 GMT                      
  Currency    Latest bid   Previous day    Pct Move
  Japan yen       119.53         119.51       -0.02
  Sing dlr        1.3173         1.3149       -0.18
  Taiwan dlr      31.543         31.472       -0.23
  Korean won     1094.82        1102.00       +0.66
  Baht             32.85          32.86       +0.02
  Peso             44.62          44.73       +0.24
  Rupiah        12440.00       12475.00       +0.28
  Rupee            63.19          63.26       +0.12
  Ringgit         3.4860         3.4765       -0.27
  Yuan            6.2242         6.2202       -0.06
                                                       
  Change so far in 2014                                
  Currency    Latest bid  End prev year    Pct Move
  Japan yen       119.53         105.28      -11.93
  Sing dlr        1.3173         1.2632       -4.11
  Taiwan dlr      31.543         29.950       -5.05
  Korean won     1094.82        1055.40       -3.60
  Baht             32.85          32.86       +0.04
  Peso             44.62          44.40       -0.50
  Rupiah        12440.00       12160.00       -2.25
  Rupee            63.19          61.80       -2.19
  Ringgit         3.4860         3.2755       -6.04
  Yuan            6.2242         6.0539       -2.74
                                                       
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