Emerging Asian currencies up

Most emerging Asian currencies rose on Friday as investors added risk assets including them in the wake of Europe's debt deal, and the South Korean won was poised to strengthen the most this week and month among regional peers. While Thursday's news on Europe led many to build up positions in Asian currencies, some investors saw recent gains as overdone and took profit.
Some emerging Asian currencies such as the won and the Philippine peso broke technical resistance levels, indicating more appreciation in the near term. In the past two weeks, investors already increased their long positions in the won to the biggest since mid-July and expanded bets on the Singapore dollar to the largest since late August, a Reuters poll showed.
"The relief rally is well in effect, although I am sceptical regarding the EU solution. Being long SGD, KRW, MYR and CNY seems to be a constructive approach," said Sacha Tihanyi, senior currency strategist for Scotia Capital in Hong Kong. Those currencies will rise more in the near term, Tihanyi predicted.
On Friday, leveraged accounts and speculators reduced long Singapore dollar positions as agent banks of the Monetary Authority of Singapore were seen around 1.2400 per the US dollar, dealers said. "There's still room to run a bit more. But I'd be inclined to reduce shorts (in dollar/Asian currencies) if there are big positions here," said a European bank dealer in Singapore. The won this week rose 3.8 percent against the dollar, its largest weekly gain since early May 2009, according to Thomson Reuters data.
The South Korean currency has gained 6.6 percent so far in October, and is poised for its biggest monthly advance since April 2009. Dollar/won breached the 61.8 percent Fibonacci retracement levels of its rise between August and October as exporters such as shipbuilders sold it for settlements. But the pair ended local trade higher than a 200-day moving average of 1,100.6 as importers bought it on caution over possible intervention by the foreign exchange authorities.
"I am reluctant to add short positions here as I am not brave enough to go against the authorities," said a foreign bank dealer in Seoul. US dollar/Singapore dollar dipped below 1.2400, but rebounded to around the 61.8 retracement of its rise between July and October on intervention caution. In the previous session, the pair broke through the retracement of 1.2454.
Meanwhile, Goldman Sachs advised buying the Singapore dollar as well as the Malaysian ringgit against the dollar and the euro. Dollar/peso started lower than the 61.8 percent retracement at 42.79 of its rise between August and October and slipped to a 42.53 low before running into short covering interests ahead of an extended weekend.
Philippine markets will be closed for holidays on Monday and Tuesday. Markets are also wary of the central ban's intervention at 42.50. It has the 76.4 percent retracement level at 42.45. The central bank said it has increased the capital provisions for non-deliverable forwards (NDFs) positions, with the higher risk weight to take affect on January 1, 2012.