SINGAPORE, July 14 — Emerging Asian currencies mostly inched higher today, stabilising after taking a fall late last week, as investor jitters over problems at a Portuguese bank eased.

Many Asian currencies had declined late last week as investors booked profits due to fears about the potential fallout from financial troubles at the family-owned holding companies behind Portugal’s largest-listed bank.

Market jitters, however, have gradually eased in the wake of a statement by Banco Espirito Santo, saying that loan losses that hit its founding family would not put the bank at risk of running short of capital.

“You had a little bit of profit-taking on the back of the Portuguese concern, but that subsided quite quickly because people realised it’s not going to be a systemic, sort of contagion scenario,” said Andy Ji, Asian currency strategist for Commonwealth Bank of Australia in Singapore.

The market may also be positioning for the possibility of some dovish comments from US Federal Reserve chief Janet Yellen, ahead of her testimony to Congress this week, Ji said.

Most emerging Asian currencies have risen this year as investors took advantage of easier monetary policies by major central banks to seek higher returns in the region.

Indonesian rupiah

The rupiah weakened 0.6 per cent to 11,650 per dollar. The rupiah and Indonesian stocks rallied strongly last week on the assumption of a Joko “Jokowi” Widodo victory, but fell on Friday over uncertainty about the outcome of the July 9 election, with both presidential candidates claiming victory.

“We had the presidential elections and the Bank Indonesia meeting last week so the markets traded on those factors. Now that those are out of the way, the markets are focusing on the macro outlook,” said Khoon Goh, senior FX strategist at ANZ, adding that the outlook now hinges on Yellen’s testimony tomorrow and Wednesday.

Both Jokowi and his rival, former general Prabowo Subianto, claimed victory in the election, and the Elections Commission is to announce the official result around July 22.

Singapore dollar

The Singapore dollar eased earlier after data showed that the city-state’s economy contracted in April-June for the first time in seven quarters, hit by a sharp drop in manufacturing activity.

The Singapore dollar last held steady at 1.2411 to the US dollar, having dipped to as low as 1.2421 earlier today.

“The weak GDP data is a catalyst for the Singapore dollar to weaken against the US dollar,” said Goh of ANZ.

“The 1.24 level is a key support for USD/SGD and I don’t expect that to be tested. Key resistance for USD/SGD is at 1.2440, if it manages to break that, we can see the 1.25 level in the next couple of weeks,” he added.

* Thai baht’s previous close is from last Thursday. Thai markets were closed on Friday for a public holiday. — Reuters