Won, ringgit extend gains

The South Korean won and the Malaysian ringgit extended gains on Friday, leading their Asian peers, on a broadly weaker dollar and as investors continued to buy the regional stocks, while China provided further support by fixing the yuan's mid-point at a fresh record high.
But South Korea's foreign exchange authorities and the Malaysian central bank were spotted buying dollars to slow down the rise in their currencies, dealers said. Emerging Asian currencies may remain firm next week, helped by a softer dollar and expectations that China may allow the yuan to appreciate further to fight inflation, but persistent worries about Greece's debt problems will dampen appetite for riskier assets, dealers and analysts said.
"The yuan fixing alone may not be enough to strengthen Asian currencies, the dollar itself needs to weaken for emerging Asian FX to exploit that CNY fixing on the firm side," said Suresh Kumar Ramanathan, regional rates and foreign exchange strategist for CIMB Investment Bank in Kuala Lumpur. The won broke through a 20-day moving average of 1,084.7 per dollar on exporters' demand for end-month settlements and as foreign investors continued to buy South Korean shares.
The South Korean currency even briefly breached 1,079.1, the 61.8 percent Fibonacci retracement line of its weakening trend of this month, but suspected intervention by the authorities forced it to cut some gains. They were spotted buying dollars when the won strengthened past 1,080, dealers said.
The ringgit strengthened past 3.0263 per dollar, the 38.2 percent retracement level of its weakening trend of late-April and May, as China's record yuan-fixing prompted stop-loss dollar sales among short-term speculators. But Malaysia's central bank was spotted buying the greenback around 3.0200 and investors took some profits.
Still, the ringgit stayed firmer than the retracement line. The Singapore dollar also strengthened past the 50 percent retracement of its weakening trend this month on stop-loss buying. It has room to strengthen more, probably to 1.2334 per US dollar, the 61.8 percent retracement level.