SINGAPORE: The won and the Singapore dollar turned slightly higher on Thursday as investors reduced US dollar positions, but investors remained bearish towards riskier assets as Europe's debt crisis deepened.
Investors are reluctant to buy the regional units as French borrowing costs kept rising on Wednesday and the European Central Bank's purchases of Italian and Spanish debts failed to reassure markets.
That pushed down most Asian stocks and added to strains which are emerging in money markets.
Investors are keeping an eye on auctions of up to 11 billion euros of Spanish and French bonds later in the day.
"We find very little ability to go beyond the tail risk of a Greece exit (from the EU) in forecasting events as the year-end approaches, but we do know that uneasy feeling of a major tail risk is ahead, the big question is when," said Suresh Kumar Ramanathan, regional rates and foreign exchange strategist for CIMB Investment Bank in Kuala Lumpur.
"From money markets facing a dollar shortage in Asia and the euro zone and the need for the EFSF to be given a banking license to step up monetization of the euro zone debt, the list of contentious issues io long," he said, adding the current environment continues to play against directional traders in emerging Asia and proprietary names who are taking structured medium term positions.
Earlier, the South Korean won briefly weakened past a technical support area between 1,135 and 1,140 per dollar as offshore funds sold it.
The Singapore dollar also broke through support at 1.3000 versus US dollar after worse-than-expected export data.
But both of the local currencies turned higher as investors later reduced long-dollar positions.
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