Profit-taking hits Singapore dollar, won on intervention talk

SINGAPORE: The Singapore dollar and the South Korean won shed gains on Monday as investors took profits from this month's rally in emerging Asian currencies, refraining from buying as speculation grew on possible intervention by some regional central banks.

Some dealers said South Korean foreign exchange authorities were seen buying dollars to prevent the won strengthening past 1,100 per dollar, while others said they did not see such intervention, attributing its falls to offshore funds' dollar-short covering.

The Monetary Authority of Singapore (MAS) was suspected of buying the US dollar when the city-state's currency strengthened past 1.24 versus the greenback, dealers said.

Japan's intervention in the currency market pushed the yen down more than 4 percent not only against the dollar but also versus emerging Asian currencies.

"It became more difficult to short dollar/Asia here, especially after suspected intervention from most of Asia," said a Singapore bank dealer.

A few emerging Asian countries, such as South Korea, compete with Japan in the export markets and a weaker yen can eat into its profits.

Most emerging Asian units has risen against the dollar so far this month due to some progress made by European policymakers to stem the continent's debt crisis.

Last week, the regional currencies advanced as investors added risk assets after Europe's debt deal, with some such as the won breaching a technical resistance line.

The South Korean currencies gained 6.1 percent against the dollar in October, posting its biggest monthly rise since April 2009 and being poised for the best performing emerging Asian currency this month, according to Thomson Reuters data.

The Singapore dollar, the No.2 performer so far this month, has risen 4.7 percent, which would be the largest monthly gain since December 2008, data showed.

Such gains are not the only factor for investors to be cautious over emerging Asian currencies. They are also awaiting policy meetings of major central banks, such as the European Central Bank, and various economic data later this week.

Still, some dealers are looking to buy Asian currencies on dips, saying the dollar's outlook is not bright on speculation of further easing by the Federal Reserve.

"I won't cover short-positions immediately as all depends on how long intervention would last," said a European bank dealer in Singapore.

"Dollar/Asia will soften eventually, unless negative news out of the euro zone. So I will probably wait for chances to sell dollar/Asia."

WON

Dollar/won briefly broke through a 200-day moving average at 1,100.5 on supplies from exporters and offers linked to foreign investors' recent stock purchases.

But investors covered short-positions and importers bought the pair on speculation that authorities may defend 1,100 level.

Offshore funds bought yen/won as the pair hit a six-week low after Japan's intervention, dealers said.

Yen/won has support around 13.62-13.76 with a 200-day moving average and the 76.4 percent Fibonacci retracement.

A currency analyst in Seoul said some players may doubt how long the Japan intervention affect would last.

SINGAPORE DOLLAR

US dollar/Singapore dollar rose on talk of intervention by the MAS. The pair found more support from on short squeezes on the euro's falls.

Earlier, US dollar/Singapore dollar fell to 1.2385, around a 100-day moving average, on selling from leveraged and macro accounts.

Dollar/baht rose on jump in dollar/yen and US dollar/Singapore dollar.

Nearby resistance is found at 30.80, with break to target return to the 31.00 handle.

RUPIAH

Dollar/rupiah gained as speculators and leveraged names touted buying from 8,835 this morning.

Higher dollar across Asia supported the pair but overall trades remain fairly calm.

Copyright Reuters, 2011