Ringgit, won lead gain

SINGAPORE: The Malaysian ringgit and the South Korean won led gains on Friday, helped by exporters and as speculators entered long positions in the currencies with slowly revived risk appetite supporting regional stocks and the euro.

Trading was subdued however, as persistent worries about the possibility of debt restructuring in Greece caused investors to doubt the sustainability of the euro's strength.

The concerns may rattle emerging Asian currencies again, along with other riskier assets, although investors still prefer Asian currencies for the longer term on stronger fundamentals. Positions in the currencies do not appear overly heavy, analysts and dealers said.

‘Sentiment appears to be settling down somewhat, but I can't see Asian currencies racing higher,’ said Jonathan Cavenagh, a currency strategist at Westpac in Singapore.

Emerging Asian currencies have suffered this month as investors covered dollar-short positions to book profits with corrections in the euro and commodities.

Shaky views about the euro may put more pressure on Asian regional currencies, but their bullish trend in the longer term remains intact, analysts said.

‘Going into next week, trading from the short USD/AXJ side is the easier position to have,’ said Kenneth Kan, head of emerging markets forex trading at Credit Agricole Corporate and Investment Bank in Singapore.

‘Forward points are still attractive for the likes of CNY, TWD and MYR as they are trading at the upper end of their trading ranges and short USD positioning is not crowded as compared to at the end of April.’

RINGGIT

The ringgit strengthened to as firm as 3.0030 per dollar, the 50 percent Fibonacci retracement level of April-May weakening trend, with interbank speculators building up dollar-short positions amid stabilising riskier assets.

But the Malaysian currency gave up some of the increase, returning to resistance lines around 3.0100, near its lows of April 14 and April 20.

WON

The South Korean won gained on exporters' demand for settlements and as speculators built up dollar-short positions.

Currency players largely ignored South Korea's decision to cut the ceiling on banks' foreign exchange derivative positions by a fifth and possible restrictions on foreign-currency bond issuance at home because the decision was expected.

The won failed to strengthen past 1,080 per dollar where 14-day and 20-day moving averages are located as state-run importers bought dollars.

Foreign investors also extended their selling spree in Seoul's main stock market for a seventh consecutive session, the longest selling streak in nearly a year.

‘The won is seen creeping higher on sustained preference, especially as it succeeded to escape from the 1,090 zone. But I don't think it would rise much from here as it is difficult find solutions for Greece and on uneven economic indicators,’ said a local bank dealer in Seoul.