Won cuts gains

The won was flat on Friday as continued risk reduction by investors on worries over the global economy and European debt woes outweighed a surprise rate hike by the Bank of Korea. Emerging Asian currencies began the session with some support from a rebound in US stocks, which investors had hoped to revive risk appetite.
The won also tried to extend gains after the Bank of Korea unexpectedly increased its policy rate. The South Korean unit strengthened as much as 0.5 percent after the rate increase but failed to extend gains on weaker stocks and caution over possible dollar-buying intervention by the authorities.
The Singapore dollar and the Malaysian ringgit turned lower as investors covered dollar-short positions on a weaker euro. The Singapore dollar, which started the day firmer, lost over 0.2 percent to breached 1.2328 per the US dollar, the 23.6 percent Fibonacci retracement line of its strengthening trend between May and early June.
If the level is clearly broken, it may head to 1.2367, the 38.2 percent retracement. The ringgit also weakened past 3.0197 versus the greenback, the 38.2 percent retracement line of its strengthening trend during the similar period. The Malaysian currency has room to weaken further, probably to 3.0290, the 50 percent retracement line, if the 38.2 percent level is cleared.