27/03/2014 09:28 AST
SINGAPORE: The Singapore dollar hit a one-week high on Thursday as investors bet that the central bank may keep tightening bias in a policy meeting in April, while most emerging Asian currencies rose on month-end corporate demand.
The Philippine peso edged lower before the central bank's policy meeting later in the day.
It is expected to leave interest rates on hold this time, but the chances of a rate hike in the second quarter have risen following hawkish comments from its governor last week, Reuters poll showed.
Singapore's dollar rose as investors covered short positions, starting to position for the upcoming semi-annual policy meeting in April.
The unit's strength supported the neighbouring Malaysian ringgit.
South Korea's won gained on exporters' demand for settlements and on a possible demand-related deal between Saudi Arabian Oil Co (Saudi Aramco) and Korean Air Lines Co Ltd .
"I think eventually we will see more certain dollar trend on the stronger path but the strength is not convincing enough to lift all dollar/Asia," said Andy Ji, Asian currency strategist for Commonwealth Bank of Australia in Singapore.
"The outperformance of higher yielders since the start of the year against further tapering of Fed's asset purchases point to some resilience in the regional space," Ji said, referring to the Federal Reserve.
Some of the emerging Asian currencies such as the Indonesian rupiah have risen as investors sought higher yields within the region amid improving economic fundamentals.
SINGAPORE DOLLAR
The Singapore dollar advanced as much as 0.3 percent to 1.2640 to the US dollar, its strongest since March 19.
The central bank is expected to maintain tightening stance by keeping the slope width and centre of the Singapore dollar nominal effective exchange rate (NEER), HSBC said in a note to clients.
The Monetary Authority of Singapore (MAS) conducts monetary policy by managing the rise or fall of the local dollar against the currencies of its main trading partners.
"Global economic conditions should improve and lift growth during the second half of the year, further squeezing existing capacity and adding to underlying inflation pressures," HSBC said.
"The SGD should outperform ASEAN currencies on the back of steady FX policy. The MAS has shown a preference for the SGD NEER to trade in the strong side of the band which will help support the SGD," it added referring to the Singapore dollar.
The city-states currency, however, is seen facing a chart resistance area around 1.2630 against the US dollar, analysts said.
It has the 76.4 percent Fibonacci retracement at 1.2631 of its depreciation between February and March.
The Singapore dollar also has a 100-day moving average at 1.2636. It has been weaker than the average since mid-December.
RINGGIT
The ringgit rose on month-end corporate demand and tracking the Singapore dollar's strength.
Malaysian importers bought the US dollar around 3.2900, limiting the ringgit's gains, traders said.
The Malaysian unit also slid to the neighbouring Singapore dollar.
WON
The won started the day weaker but turned higher on demand from exporters for month-end settlements.
The South Korean currency may strengthen further as such corporate flows may intensify as the month-end is approaching, while some traders said its gains will be limited around 1,070 for now, given a weaker Chinese yuan.
"The won is likely to get a temporary booster, but it may foam a chart resistance around 1,071," said a South Korean bank trader in Seoul, adding some offshore funds bought dollar around the level.
The won has the 50.0 percent Fibonacci retracement at 1,070.6 per dollar of its depreciation between February and March.
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