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