The Singapore dollar hit a four-year high versus the yen, while the South Korean won and the Philippine peso touched their strongest in more than two and a half years to the Japanese currency. Shinzo Abe, who has been pushing the Bank of Japan for more radical easing to defeat Japan's deflation, became the country's premier on Wednesday.
"Emerging Asian countries will enjoy more inflows from not only Japan but also other major countries with policy easing," said Yuna Park, a currency and bond analyst at Dongbu Securities in Seoul. "Few countries in the region are likely to follow Japan's policy stimulus as they are not facing problems of low inflation and weak growth," Park added.
Still, investors stayed cautious over the US fiscal crisis, which has continued to keep pressure on emerging Asian currencies against the dollar. President Barack Obama is cutting short his Hawaii holiday to return to Washington to work on the unfinished "fiscal cliff" talks with Congress, White House said on Tuesday.
Worries about the looming fiscal crunch put a brake on appreciation in emerging Asian currencies, which have been key beneficiaries of policy stimulus of major central banks. The Singapore dollar hit 1.2248 to the US dollar, its weakest since November 23 after data showing the city-state's industrial production rose a less-than-expected 3.1 percent in November from a year earlier.
But against the yen, the Singapore dollar rose 0.6 percent to 1.4306, its strongest since October 2008. The rupiah slid against the dollar on corporate dollar demand, although the central bank intervened with dollar-selling to support the Indonesian currency, dealers said. The local unit's indicative prices weakened to 9,700 per dollar, but its market prices were softer than the screen ones, they said. Some investors bought the euro against the rupiah to secure dollars, dealers said. Bank Indonesia was spotted selling dollars when the currency reached 9,770 as well as 9,750 and 9,730, according to dealers. The Philippine peso eased versus the dollar amid subdued trading as some investors covered short positions in the greenback before the year-end.
A foreign bank dealer in Manila said investors still appeared to hold bearish bets in the US currency, which may put pressure on the peso. The peso may head to 41.40 per dollar and 41.50, he added. The Philippine currency hit 0.4806 to the yen, its strongest since May 2010.