Singapore dollar and won rally

The Singapore dollar rose to a new record and the South Korean won hit a near three-year peak on Friday as a European package to rescue Greece led investors to buy emerging Asian currencies, despite intervention by Asian authorities and technical signs being overbought.
Investors say they are waiting to see if US politicians cobble together an agreement to avoid default, but the currencies are likely to keep their bullish trend, analysts said.
If Washington fails to reach an agreement before the August 2 deadline, that may dampen risk appetite again, but that will also push down the dollar, which will eventually support the regional units, some added.
"With EUR risk in the background at least in the near term, speculative players are back looking to go short USD/Asia pairs. Asian currencies have broken fresh highs... I think it continues to push emerging Asian currencies higher," said Westpac currency strategist Jonathan Cavenagh in Singapore.
Emerging Asian currencies rose for the week as concerns over the debt crisis in the two developed markets eased.
The Philippine peso and the Malaysian ringgit were the best performers during the week, gaining 1.3 percent and 1.1 percent, according to Reuters calculations. The 14-day Relative Strength Index (RSI) for the USD/THB hit a three-month low of 28, suggesting the pair is headed higher in the short-term, and the baht could weaken from current levels. The RSI of the Singapore dollar and Korean won are also hovering around the threshold of 30, indicating weakness ahead for the Asian units.
Model funds, leveraged names and proprietary accounts pushed up the Singapore dollar to a record high of 1.2086 per the greenback. Earlier, agent banks had been spotted buying the US dollars at 1.2100 but lowering the bids to 1.2090 in heavy intervention, dealers said.
Seoul's foreign exchange authorities intervened to keep the won weaker than 1,050 per dollar, dealers said. The South Korean currency earlier rose to 1,050.0, the highest since late August 2008, on demand from offshore real money funds and exporters.
The baht rose on strong demand from proprietary accounts and leveraged funds. But the central bank was spotted buying dollars from 29.84 per dollar level all the way down, dealers said.
Bank of Thailand is expected to keep intervening to slow down the baht's appreciation and Thailand's trade balance is likely to turn to deficit more often on strong oil prices, Barclays said. The ringgit gained on heavy demand from proprietary accounts, model funds and exporters.