All manner of Asian regional central banks intervened last night to buy their local currencies as European contagion and geopolitical concerns combined to undermine the currencies.
Why is this important in the macro picture?
Because just like when EUR/USD was rallying on reserve diversification by these same Asian central banks last year, the euro is now falling as the central banks buy local currencies and offload euros from the reserve horde.
South Korea is rumored to have sold $5 bln last night, some portion of which ended up being bought back against the euro. Same story for the Philippines, Taiwan, Malaysia, etc.
Those euro sales come at a time when the single currency is struggling amid real estate-led weakness in the Spanish banking system and contagion from Greece.
UPDATE: Traders note that the BOK currency selling went far beyond EUR. The sold AUD, GBP, CAD and JPY as well…
