The South Korean won led gains among emerging Asian currencies on Wednesday as investors added risk holdings, but some of regional units such as the Singapore dollar slid on profit taking before another Spanish bond auction.
Most of emerging Asian currencies initially rose, tracking other risky assets including stocks on a well-received Spanish debt auction, positive corporate earnings and an upbeat German sentiment survey.
Spain on Tuesday sold a more-than-planned 3.2 billion euros ($4.21 billion) of 12-month and 18-month bills thanks to solid demand from domestic banks, and amid easing concerns over its refinancing ability and the euro zone's debt problems.
"(Tuesday's) Spain auction result is just a temporary boost to risk assets. Given inherent euro zone risks, near-term strength in dollar/Asian currencies could still be seen," said Enrico Tanuwidjaja, a currency strategist at Maybank in Singapore.
Some experts believe Madrid may be forced to eventually seek a multi-billion euro bailout for its banks and perhaps even for the state itself. The South Korean won rose, but trimmed some gains to foreign investors repatriating dividends paid out by local companies after starting the session firmer than Tuesday's intraday high. The won was quoted at 1,137.3 at the end of the domestic session, compared with Tuesday's close of 1,140.5.
Offshore funds covered short positions, while importers bought greenbacks for settlements. "It is difficult to expect strong rallies in the won and emerging Asian currencies as Spain's problems are not seen solving anytime soon," said a foreign bank dealer in Seoul.
Dollar/ringgit fell on improved risk sentiment, but recovered lost ground due to short covering. The Malaysian bank dealer in Kuala Lumpur said he would buy the ringgit only on dips ahead of Spain's bond sale on Thursday.
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