Won, ringgit rise but vulnerable to risk unwind

SINGAPORE: The South Korean won and the Malaysian ringgit rose on Tuesday but speculators kept selling other regional currencies on rallies, suggesting quarter-end dollar demand and risk reduction related to Greece's austerity vote will keep their upside limited.

Exporter demand were also a factor helping the won and inflows in anticipation of Bumi Armada's initial public offering next month.

However, these flows were not expected to be persistent, and emerging Asian currencies in general were vulnerable to a selloff of risky assets in reaction to a Greek parliamentary vote on austerity measures, which the country needs to avoid a default, expected on Wednesday and Thursday.

"We see upside risk in USD/AXJ this week as risk will remain firmly off and USD shorts continued to unwind, albeit mostly against a faltering euro," said Andy Ji, Asian currency strategist at Commonwealth Bank of Australia in Singapore.

"We would trim exposure to Asia FX and in general risky assets, as a further risk unwind is possible this week."

Emerging Asian currencies have given up some of the gains they made earlier this year due to worries about the Greek debt crisis and a slowing global economic recovery.

The Thai baht has been leading to the downside. It had gained as much as 1.4 percent against the dollar earlier this year, but has turned tide and is down 2.6 percent year-to-date.

WON

The won rose against the dollar as South Korean shipbuilders bought the local currency for the quarter-end settlements.

But the South Korean currency gave up some of its earlier gains to close to a 60-day moving average as investors covered dollar-short positions.

The local currency strengthened as much as 0.5 percent to 1,080.2 per dollar, but erased some gains to end domestic trade at 1,083.5, just below the 60-day moving average at 1,083.6.

RINGGIT

A close in the ringgit below the 200-day moving average, which stands at 3.0602 per dollar, will be a good signal to sell the ringgit.

The ringgit has been trading firmer than the average for the past two years, although on Monday it had weakened past the average briefly.

If the ringgit clearly breaks the average, it may head to 3.0636, the 50 percent Fibonacci retracement of its strengthening trend between December and April and the 61.8 percent retracement of 3.0883.

RUPIAH

The rupiah edged down to 8,625/dollar because of half-yearly corporate dividend payouts and worries about outflows from the Greek debt crisis.

But the Indonesian central bank was spotted selling dollar again to support the rupiah, dealers said. The central bank was seen at 8,627 per dollar, they added.

Dollar/rupiah has resistance around 8,637, the 23.6 pct retracement of its decline between January and June.

BAHT

The baht hit a near five-month low against the dollar on month-end corporate demand for dollars and baht selling from foreign banks.

But the central bank was spotted selling dollars to limit the Thai currency's weakness around 30.96 per dollar and 30.98, dealers said.

COPYRIGHT REUTERS, 2011