Asian Currencies Dip as the Rupee is the Worse Performer

Asian Forex markets dipped versus the USD today with the South Korean won losing some of the gains of the past few days, as risk-taking was diminished by continual uncertainties about the euro zone’s debt crisis.

The won chopped 0.9 percent against the dollar and led the expansive fall in emerging Asian currencies. The Singapore dollar moved up 0.1 percent, keeping firm compared to its Asian counterparts.

Investors have been hesitant to follow Asian currencies higher and are guarded about their outlook for coming New Year due to concerns about the depth of the euro zone’s debt crisis on Asian economies. Similarly to currencies around the world, no one is sure how far the euro zone crisis will reach out and how to isolate and protect their own markets and growth. The world continues to wait for a plan by the EU leaders so that they can interpret the potential effects.

One factor that may be promoting such gambles is the hope that China may adopt further monetary stimulus to support its economy, such as reducing the ratio of deposits banks are required to keep as reserves…

If that helps to put a base under Asian growth, then on a relative basis Asia will still be looking more attractive than certainly Europe the recent moves in the euro versus the Singapore dollar propose that such positioning may be taking place. While the Singapore dollar dropped 1.1 percent versus the U.S. dollar this month, it has jumped roughly 1.9 percent against the euro.

The Rupee is the worst performing Asian currency in 2011. It touched a record low of 54.30 to the dollar last week. Rupee has lost about 17 per cent against the US dollar since its year high in July, and.

The Reserve Bank of India have taken steps to hold up the rupee, including putting curbs on exploratory trading, but analysts say some of the steps risk hurting the currency in the long term.

The rupee closed weaker but off its intraday low today on signs that the European Central Bank’s massive loans to banks will avert a euro zone credit crunch for now. At least giving one a relaxing Christmas break.

The RBI is believed to have sold dollars on last week after the rupee hit a record low of 54.30 to the USD, and traders imagine it has been intervening intermittently ever since.