The South Korean won and the Malaysian ringgit breached technical resistance levels on Wednesday, leading most emerging Asian currencies higher on expectations of increased fund flow to the region this year. Trading was subdued as financial markets in China and Hong Kong remained closed for the Lunar New Year holiday.
Emerging Asian currencies are likely to stay firm on anticipation of prolonged ultra-low US interest rates and some signs of easing debt problems in Europe, analysts and dealers said. "Even if the Fed maintains its policy stance, the recent improvement in the euro zone on ECB's actions already enhanced global liquidity environment. Asia will benefit more from the liquidity," said Jeong My-young, a currency strategist at Samsung Futures in Seoul.
The US dollar/Singapore dollar's Relative Strength Index (RSI) fell to 31.64, close to the 30 threshold, indicating the pair is approaching to oversold territory. Dollar/won ended local trade lower than a 120-day moving average support of 1,129.6 as foreign investors extended their buying streak in the Seoul stock market to the longest in eight months.
The pair may head to 1,122.0, its December 1 and the next target would be 1,115.8, the 76.4 percent Fibonacci retracement of its October-December rise. Foreign investors bought a net 930.2 billion won ($820.10 million) in Seoul shares, purchasing them for a tenth consecutive session, the longest buying spree since early May last year. Dollar/ringgit broke through the 76.4 percent Fibonacci retracement support around 3.0780 as macro accounts sold it amid thin liquidity.
The pair may head to a moving average at 3.0696. Dollar/Philippine fell, but downside was limited as investors covered short positions. The pair's 14-day RSI slid to 35.22, the lowest since early August last year, indicating it is moving to oversold territory. Dollar/baht rose on sustained demand from foreign names and importers.
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