SINGAPORE: Most emerging Asian currencies rose on Tuesday on hopes of progress in tackling the euro zone debt crisis, but traders were quick to take profits on gains, fearing divided European leaders may again disappoint financial markets.
"It is better to sell risk including Asian currencies on any rally as we see very few reasons to be optimistic in the next few weeks," said Frances Cheung, senior strategist for Credit Agricole CIB in Hong Kong.
"There are still political hurdles in European and the economic data in Asia is not helping either," said Cheung.
Long positions in emerging Asian currencies have been reduced, which will help the regional units limit their slide, but Cheung said she would expect further losses if investors continue to avoid riskier assets.
Emerging Asian currencies are headed for a losing month as Europe's deepening crisis takes a toll on investor sentiment.
Euro zone finance ministers plan to meet later on Tuesday to approve detailed arrangements for scaling up the European Financial Stability Facility (EFSF) rescue fund to help prevent further contagion in bond markets. They are also expected to release a vital aid lifeline for Greece.
Germany and France reportedly aim to outline proposals for a fiscal union before a European Union summit on Dec. 9, which is increasingly seen by investors as possibly the last chance to avert a breakdown of the single currency area.
Still, market players stayed wary, especially ahead of a slew of bond auctions on the continent including one by Italy later in the day.
"The market is biased toward risk. But I won't join the fun until I see equities rise a few days in a row," said a senior dealer in Kuala Lumpur.
WON
Custodian banks and South Korean exporters sold dollar/won while interbank speculators joined in with some stop-loss selling triggered by a higher euro, dealers said.
But local importers bought the pair on dips, limiting its slide, dealers say.
Dollar/won is expected to trade in a range between 1,135 and 1,165.
Foreign investors snapped eight straight sessions of selling by purchasing a net 378.7 billion won ($328.1 million).
RINGGIT
Dollar/ringgit slid on catch-up plays, but interbank speculators covered short positions around 3.1800 as the pair is seen having support around 3.1710 for the day.
The pair has channel on the daily chart base at the level. It also has a cluster of highs around 3.1680-3.1700 between Nov 16-18, which became good support after it broke.
Malaysian financial markets were closed on Monday for a holiday.
PHILIPPINE PESO
Dollar/peso fell as interbank speculators sold on hopes European officials will finally make some progress in tackling the debt crisis.
But a European bank dealer in Manila sounded cautious over headline risks, saying there are no concrete developments out of the euro zone yet.
"Right now with the risk rally across, people are looking to sell on rallies. But all know one bad news is just what the market needs to reverse."
Reflecting his view, some speculators covered short positions, especially as Philippine financial markets will be closed for a holiday on Wednesday.
SINGAPORE DOLLAR
US dollar/Singapore dollar fell through 1.3000 level as a higher euro prompted stop-loss selling by interbank speculators.
The market appears to be settling into a the relative comfort of a 1.2900- 1.3200 range for a while pending new factors.
BAHT
Dollar/baht edged up on month-end corporate demand in Thailand although some dealers sighted Japanese investors buying the baht, probably linked to re-insurance for those affected by recent flooding.
Some offshore funds bought the pair as its recent pullback has been shallow, perhaps highlighting dollar strength.
Analysts advised buying dollar/baht on dips to 31.20 with a 30.90 stop for 32.00-32.10.
But it may find resistance from exporters, dealers said.
A Bangkok-based dealer said exporters "seem to hold some dollars to sell."
RUPIAH
Dollar/rupiah rose amid thin liquidity as offshore players continued to buy the pair, though only modest bond outflows have been seen so far this month.
But the Indonesian central bank said it remained in the currency market, intervening by selling dollars, to stabilise the local currency.
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