Won and ringgit plunge

The South Korean won and the Malaysian ringgit hit their lowest in about two weeks on Wednesday as hedge funds and model funds reduced positions in emerging Asian currencies on renewed worries about the eurozone's debt crisis and global economic slowdown.
Investment banks from the United States and Europe bought some emerging Asian currencies on dips while some investors showed interest in the Philippine peso and the Singapore dollar, indicating players have not lost an appetite for the regional units. Rekindled concerns over the troubled US economy and the euro zone's debt crisis are expected to prompt further profit-taking from Asian currencies, but that would not hurt the relatively brighter outlook for the units, analysts and dealers said. Emerging Asian currencies have enjoyed inflows to the region which has better economic fundamentals than developed markets and where policymakers are still fighting inflation.
Offshore players such as hedge funds and interbank speculators covered dollar-short positions, sending the won to its weakest in more than two weeks, while global risk aversion hit Seoul shares. The won ended local trade down 0.9 percent at 1,060.4 per dollar, slightly firmer than the session's low of 1,060.5, the weakest since July 19. The ringgit weakened to as soft as 2.9820 per dollar, the weakest since July 22, as model funds covered dollar-short positions.
But the Malaysian currency recovered some falls as the euro strengthened to 1.42 versus the greenback. The Singapore dollar also suffered from US dollar-short covering, then clawed back some of the slip. Earlier, Deutsche Bank recommended buying the city-state's currency against the dollar with a target break of 1.18 and receiving Singapore dollar two-year/five-year interest rate swap with a target break of 70 basis points.
The Philippine peso gapped down against the dollar on foreign banks' offers amid global growth worries. The level is the 38.2 percent Fibonacci retracement level of its gains between July-August. The 14-day dollar/peso Relative Strength Index (RSI), which hit 24.4, the lowest since mid-April last year on Monday, rebounded to 37.3, indicating the pair is not in oversold territory anymore.