Some Asian currencies inched higher on Wednesday as decade-low US manufacturing activity data kept the dollar subdued, while South Korea’s won weakened after North Korea fired a ballistic missile.
The data on factory activity hit global equity markets as it increased worries about a slowing US economy. South Korea said its neighbor fired at least one missile off its east coast, possibly from a submarine, one day after announcing the resumption of talks with the United States aimed at ending its nuclear program.
“For the won, geopolitical risk premium is the main driver, with North Korea testing some missiles … that typically triggers a pare back in long won positions,” said Chang Wei Liang, a macro strategist at DBS Bank in Singapore.
The South Korean won declined 0.5 percent in its second straight session of weakening. Dismal inflation and exports data had pressured the currency on Tuesday, after stoking bets of further monetary policy easing for the trade-reliant economy.
The offshore yuan traded 0.1 percent lower, while other Chinese markets remained closed on account of the National Day holiday.
The Singapore dollar edged down marginally, tracking weakness in the offshore yuan, while Indonesia’s rupiah climbed slightly after two consecutive sessions of losses.
“The rupiah and rupee are more vulnerable to external portfolio flows, given they are current account deficit countries. If markets see a more significant pare back in risk taking, then these are the two currencies to keep an eye on,” said Chang Wei Liang.
Indian markets were closed on Wednesday for a public holiday. — Reuters
