Ringgit leads Asia FX gains

The Malaysian ringgit broke through a technical resistance and led gains among most emerging Asian currencies on Thursday as expectations for fresh Federal Reserve steps to help the US economy increased hopes for more inflows to Asia.
Fed Chairman Ben Bernanke said on Wednesday the US central bank was ready to offer additional stimulus after announcing that it would likely keep interest rates near zero until at least late 2014. The long-term players, such as pension and mutual funds, have been reluctant this year to add emerging Asian currencies for building up core positions due to worries about the euro zone's debt crisis. Still, some of them have bought the regional units for tactical bets, dealers and analysts have said.
"Real money is buying into risk. I expect this to persist for a while longer and that will lead Asian FX stronger," said BNP Paribas' currency strategist Thio Chin Loo in Singapore.
Westpac said the Fed's dovish stance is likely to keep capital flowing into Asia and keep regional equity markets well supported, adding its overall bias remains for further strength in Asian currencies. Dollar/ringgit breached a technical support around 3.0400 on foreigners' interest in Malaysian bonds and as interbank speculators dumped the pair.
Model funds joined the selling and fixing-related offers also put pressure on the pair. It slid to as low as 3.0355, the lowest since September 13, but some speculators covered short positions, limiting its slide. The pair's 14-day Relative Strength Index (RSI) fell to 19.47, well below the 30 threshold, indicating it is in an oversold territory.
"I won't add short (dollar/ringgit) positions here but will look to take profits (from the ringgit's gains) below 3.04. This move is too fast," said a Kuala Lumpur-based dealer. US dollar/Singapore dollar had broken through the 76.4 percent retracement at 1.2566 of its October-November rise, but hovered around the level recovering some losses. If the pair clears the retracement, it may head to a 200-day moving average, which stands at 1.2538.
Dollar/won fell to the lowest in nearly two and a half months as foreign investors extended their buying spree on the Seoul stock market to the longest since early May 2011. The pair slid to 1,120.3, the lowest since November 14, but could not extend losses as importers bought it amid growing caution over possible dollar-buying intervention by South Korean foreign exchange authorities. Dollar/Philippine peso fell, but investors were wary of possible dollar-buying intervention by the central bank. Dealers said the central bank might step in the market at 42.80.