Philippine peso may weaken to 45.30 to US dollar
SINGAPORE (UPDATE) - The Malaysian ringgit and the Philippine peso led losses among emerging Asian currencies on Wednesday as solid U.S. retail data and hawkish comments by Federal Reserve officials revived expectations its stimulus could be trimmed aggressively.
The peso ended local trade down 0.4 percent at 45.00 per dollar, its weakest since September 2010 on stop-loss selling. The peso closed at P45.08 per dollar on Sept. 1, 2010.
"The movement of the peso is being influenced by a number of factors... These would include the uncertainty about the speed and the duration of the Fed tapering--that's the main factor," Bangko Sentral ng Pilipinas governor Amando M. Tetangco, Jr. said.
The ringgit fell as investors covered short positions in the dollar. The Indian rupee, however, rose as data showed headline inflation in December eased to a five-month low, raising expectations the central bank will keep interest rates on hold at its policy review on Jan. 28.
The South Korean won slid as offshore funds sold it. Thailand's baht edged weaker on sustained political turmoil as a loud blast shook the house of a senior opposition leader overnight.
The dollar broadly rose as U.S. retail sales edged up in December with a core spending gauge posting a big jump, suggesting a solid recovery in the world's largest economy.
Traders and analysts said that eased doubt over how quickly the Fed would scale back its bond-buying program, which stemmed from disappointing U.S. December jobs data.
In addition, two of the Fed's most hawkish policymakers, who take up voting power this year, said the central bank should bring its bond-buying program to a swift close.
"Asian markets will likely focus more on the implication on the pace of Fed tapering rather than the economic improvement in the U.S.", which would put pressure on most Asian currencies, said Frances Cheung, senior strategist at Credit Agricole CIB in Hong Kong.
Most emerging Asian currencies extended this year's losses as a Fed policy shift is expected to cause more capital outflows from the region.
The peso earlier lost 0.4 percent to 44.99 per dollar, its weakest since September 2010 as a break of a support at 44.85 triggered stop-loss selling among interbank speculators.
Investors were wary of potential intervention by the central bank to support the Philippine currency, especially around the psychologically-significant level of 45.00.
Still, the local unit is seen trying to weaken past that level, traders said.
"The onshore market is still not overly long dollar," said a Philippine bank trader in Manila.
Another senior Philippine bank trader expected the peso to test 45.30, the low in September 2010, in coming days.