SINGAPORE: The won turned higher thanks to inflows on Tuesday with most emerging Asian currencies slightly up, although investors kept an eye on a crucial meeting in Greece to nail a deal on unpopular reforms to prevent a messy default.
Athens' political leaders on Monday postponed a decision to accept painful conditions to secure the 130 billion euro rescue fund, but investors still expect the country to eventually accept the austerity measures and clinch the package.
The Australian central bank surprised markets by leaving interest rates unchanged, although it opened the door for an easing, helping investors maintain hopes for a recovery in the global economy and providing support to emerging Asian currencies.
"The central bank is willing to see how the economic landscape plays out. It doesn't need another insurance for now as tail risks are reducing," said BNP Paribas' currency strategist Thio Chin Loo in Singapore.
Thio, who sees Asian currencies staying firm, said the Australian decision improved risk appetite.
Most of the regional units have strengthened his year on inflows to Asia amid high liquidity as well as some signs that the euro zone debt crisis was easing.
Some currencies such as the South Korean won are approaching major technical resistance levels, so they are likely to consolidate, rather than jumping further.
Some analysts and dealers expect emerging Asian currencies to suffer from corrections on the renewed worries about the European problems.
"More liquidity at this phase of recovery has diminishing returns on both the real economy and financial markets," said another currency strategist in Singapore.
"Also, it depends on where valuation is relative to what is priced in. Right now, I wouldn't say Asian assets are at very depressed levels to get boosted by liquidity easing home and abroad," he added.
WON
Dollar/won ended local trade lower on supplies linked to foreign investors' stock purchases.
Some interbank speculators cleared long positions, which they had built up on expectations for dollar demand linked to Lone Star's sale of a stake in Korea Exchange Bank to Hana Financial Group.
Traders said they did not spot such bids during the day.
The pair started domestic market higher on demand from offshore funds and as it faces a technical support at 1,110, around a 200-day moving average.
Investors were wary of possible intervention by the authorities.
SINGAPORE DOLLAR
US dollar/Singapore dollar dipped as short-term players sold it around 1.2500.
But interbank speculators and some funds covered short-positions as the pair did not decisively clear support at 1.2460.
PHILIPPINE PESO
Dollar/Philippine peso edged up on short-covering among interbank speculators, although it gave up most of earlier gains tracking a slide in regional pairs.
Philippine central bank chief also said it has policy space to support growth after annual inflation in January was slower than expected.
Still, some traders expected dollar/Philippine peso to rise again on potential demand from importers.
"Corporate will be starting to come in soon. This could trigger more short-covering," said a European bank dealer in Manila. The trader saw the pair having room to rise to 42.80.
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