Emerging Asian currencies slid on Tuesday as investors reduced risky assets on fears of mass downgrade of European sovereign ratings, though they remained wary of potential dollar-selling intervention by regional central banks seeking to shore up their currencies.
Foreign funds and local interbank speculators sold emerging Asian currencies after rating agencies on Monday warned that Friday's European Union summit, which some saw as a last chance to save the euro, did not go far enough to ease immediate concerns about the continent's debt crisis. The Singapore dollar was barely changed as the Monetary Authority of Singapore was suspected of intervening, while the Indonesian central bank was spotted selling US dollars.
Dollar/won rose on foreign funds' demand, while South Korean exporters sold the pair before technical resistance at around 1,165, near the previous high. Dollar/ringgit rose above the 76.4 percent Fibonacci retracement at 3.1799 on fixing-related demand and as interbank speculators bought it. Dollar/Philippine peso gapped up on short-covering on worries about potential cuts in European sovereign ratings and after weak Philippine export data.
US dollar/Singapore dollar was little changed amid talk of intervention and as the pair failed to rise above 1.3040, the high on November 29. Once the level is cleared, it may head to 1.3200, the high on October 3. Fund outflows and repatriation before the year-end are seen keeping US dollar/Singapore dollar well bid.
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