The Philippine peso and the Singapore dollar followed the won with a 6.7 percent rise to the greenback and a 6.1 percent appreciation, respectively, according to Thomson Reuters data. Emerging Asian currencies are expected to advance more next year as investors are likely to keep looking for higher yields on more policy stimulus from developed countries, especially if US politicians reach a deal to avoid a fiscal crunch, dealers and analysts said.
Regional authorities will try to slow down rises in their currencies, but intervention by central banks may not be successful, they added. "Now all eyes are on the fiscal cliff but I feel that market is being a little complacent, maybe justifiably because of all the liquidity out there," said Andy Ji, Asian currency strategist for Commonwealth Bank of Australia (CBA) in Singapore.
US President Barack Obama and lawmakers are launching a last round of budget talks before a New Year's deadline to reach a deal or watch the economy go off a "fiscal cliff," that economists fear will push the United States back into recession and stamp out fragile signs of recovery elsewhere.
Japan's new government continued to press the Bank of Japan (BoJ) for drastic easing to fight deflation, while the Federal Reserve announced new round of monetary stimulus in December. The Singapore dollar also has leaped 19.0 percent versus the Japanese currency. Yield hunting may lift even the Indonesian rupiah and the Indian rupee in 2013, the worst performing emerging Asian currencies this year, CBA's Ji said.
"The INR and the IDR will eventually outperform given their yield appeal," he said, although India and Indonesia need to narrow current account deficits. The rupiah has lost 6.2 percent against the dollar on bond outflows and corporate dollar demand. The rupee has fallen 3.2 percent. The won hit 1,070.1 per dollar, its strongest since September 8, 2011, powered by demand from exporters including shipbuilders, on the last domestic trading day of the year.
The South Korean unit also touched 12.3688 to the yen, its firmest since May 2010. Technically, the won is seen heading to 11.9273 versus the Japanese currency. But investors hesitated to add more long positions in the won amid growing caution over intervention by the foreign exchange authorities to slow down the won's strength. The Philippine peso edged up as interbank speculators reduced dollar holdings on the last local trading day of 2012. The Philippine peso edged up as interbank speculators reduced dollar holdings on the last local trading day of 2012. The Singapore dollar eased on Friday as the Monetary Authority of Singapore was spotted buying US dollar through agent banks, dealers said.