Emerging Asian currencies have declined broadly since early November.
SINGAPORE: The Malaysian ringgit matched a post-1998 low set last year and the South Korean won hit a nearly six-month low on Monday, after the U.S. Federal Reserve last week signalled a faster-than-expected pace of interest rate rises in 2017.
While the size of Monday's moves was small, Asian currencies were trading at levels that underscored their weak tone against the U.S. dollar.
The Malaysian ringgit eased a tad to 4.4770, matching a 17-year low touched in September 2015. A drop past that trough would take the ringgit to its weakest level against the dollar since January 1998, during the Asian financial crisis.
The South Korean won slipped to as low as 1,188.0 as of 0432 GMT, its lowest level since late June. The Singapore dollar was trading within sight of a seven-year low of 1.4490 per dollar set on Friday.
Asian currencies declined broadly last week, after the Fed raised interest rates for the first time in a year and signalled three hikes in 2017, up from around two flagged at its September meeting.
The Fed's rate signal had triggered a renewed rise in U.S. bond yields, boosting the dollar and stoking worries about the risk of capital outflows from emerging markets, including ones in Asia.
For now, Asian currencies were underpinned somewhat after the greenback backed off from last week's 14-year high against a basket of major currencies.
However, such support for emerging Asian currencies, may prove short-lived, said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo.
"There is this general view that market participants are likely to pare back some long dollar positions ahead of the Christmas break, but I think some might try and have another go (at bullish dollar bets) before the holidays," Murata said.
A trader for a Malaysian bank said market participants are looking to add to their bullish bets on the dollar, rather than reduce them.
"The (dollar's) dips are going to be shallow," he added.
Later on Monday, investors will turn their focus to a speech by Fed Chair Janet Yellen.
Emerging Asian currencies have declined broadly since early November, as the dollar and U.S. bond yields jumped on expectations that U.S. President-elect Donald Trump's proposals for infrastructure spending and tax cuts will boost economic growth and inflation.
PHILIPPINE PESO
The Philippine central bank is due to announce an interest rate decision on Dec. 22, after holding its benchmark interest rate steady at 3.0 percent in November.
Although the central bank should consider raising rates given increasing inflationary pressures from the peso's recent weakness against the dollar, it will probably keep policy unchanged amid concerns about the economic outlook, Murata of Brown Brothers Harriman wrote in a research note.
"If the central bank doesn't express strong concern against peso weakness, there is a risk that peso selling could accelerate," Murata added.
The peso was last trading at 49.945 versus the dollar, hovering within sight of an eight-year low of 50.00 set on Nov. 24. - Reuters
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