Won leads gains in Asia forex

The South Korean won led gains in emerging Asian currencies on Friday as signs that a long-awaited Greek bailout deal was almost ready and strong US economic data gave investors confidence to rebuild some long positions they had scaled back this month. The combination of growing optimism on the economic outlook and expectations that major central banks will keep monetary policy ultra loose should continue to support emerging Asian currencies and other riskier assets.
The won rose on a short squeeze and as some investors also bought the South Korean currency against the yen amid the Japanese unit's weakness after the Bank of Japan's surprise monetary easing earlier this week. "For the medium- and long-term, I have still positive views on Asian currencies as the global economy is bottoming out. Money will come back to Asia eventually," said Sim Moh Siong, a FX strategist at Bank of Singapore.
A Reuters poll on Thursday showed investors had sharply reduced bets on regional currencies in the past two weeks, on worries they had risen too far, too fast, and on concerns about Greece, but underlying sentiment had remained positive. Analysts said that as long positions in Asian currencies had been slashed, the risk of falls on more uncertainty for the euro zone had been lessened.
Still, there was some hesitancy, with many investors waiting for the Greek bailout deal to be signed. "A wait-and-see stance may prevail in the near term as intra-day volatility has heightened in recent days," said Emmanuel Ng, foreign exchange strategist at OCBC in Singapore.
Dollar/won fell as offshore funds' offers prompted stop-loss selling. Some players built up short-yen/won positions, sending the cross pair to lowest since November 1 last year. But investors did not dare to break through 1,120 of dollar/won, which was not breached this week, and covered short- dollar/won positions.
"The market did not secure enough momentum yet to break a strong range around 1,120," said a local bank dealer in Seoul. Dollar/Philippine peso slipped as investors dumped long positions. US dollar/Taiwan dollar slid on stock inflows, but foreign banks and Taiwanese importers bought the pair, sending it to around a 220day moving average of 29.558. The pair is seen having support around 29.500 and exporters sees levels above 29.600 as more attractive to sell greenbacks, dealers said.