SEOUL: Most emerging Asian currencies edged down on Monday in subdued pre-holiday trade as concern over a US fiscal crisis caused investors to turn to the safe-haven dollar.
The Malaysian ringgit and the Singapore dollar slid as investors sought to cover short positions in the greenback.
Emerging Asian currencies have been under pressure since talks to avoid a $6 billion "fiscal cliff" of US spending cuts and tax hikes hit a deadlock last week.
Investors still expect a compromise before the year-end deadline, but continued uncertainty would likely keep them from risky assets.
"If there is a deal being reached, markets will be relieved, and then Asian currencies can gain when investors shift focus back to fundamentals," said Frances Cheung, senior strategist at Credit Agricole CIB in Hong Kong.
Emerging Asian currencies have suffered from profit-taking as investors worry the fiscal cliff package could push the US economy, Asia's major export market, into a recession.
Most of regional units have risen this year as investors sought higher-yields with stronger economic fundamentals and amid policy easing by major central banks.
On Monday, most of them advanced against the yen after Japan's incoming Prime Minister Shinzo Abe renewed pressure on the Bank of Japan to adapt a 2 percent inflation target.
RINGGIT
The ringgit slid to 3.0705 per dollar, its softest since Nov. 16, in thin trading.
But the Malaysian currency found support at the level, a 100-day moving average. The ringgit had been ending firmer than the average since late August.
SINGAPORE DOLLAR
The Singapore dollar weakened to 1.2223 to the US dollar, its weakest level since Dec. 11, as investors reduced bullish bets on the city-state's currency.
Still, the Singapore dollar recovered most initial slides on corporate demand, dealers said.
Interbank speculators hesitated to build up aggressive positions before the Christmas holiday.
WON
The won barely changed as exporters offset concerns over the US fiscal crisis and caution over possible intervention by South Korea's foreign exchange authorities to stem the currency's strength.
Earlier, outgoing President Lee Myung-bak said the currency's fast appreciation against the dollar and the yen is a "warning sign" to exporters.
But domestic exporters missed chances to buy it on dips for settlements, helping the won rebound, dealers said.
"Sustained expectations for further appreciation prompted investors to sell dollar/won on rallies," said a South Korean bank dealer in Seoul.
Center>Copyright Reuters, 2012
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