The Indian rupee and the Singapore dollar looked set to snap multi-week winning streaks on Friday as investors took profits on recent gains in emerging Asian currencies, worried by fresh setbacks in negotiations on a bailout package for Greece.
Emerging Asian currencies have strengthened against the US dollar so far this year on hopes that the euro zone's debt crisis was easing and on foreign inflows into the region's stock and bond markets, but most of them have failed to breach major resistance lines.
"Technically, markets look overdone here given the extent of the rally in January. What we saw in first month of the year was effectively a major short squeeze (in risk assets), with real money investors leading the way, reducing cash positions and putting capital to work in the face of improving global PMIs," said Callum Henderson, global head of FX research with Standard Chartered Bank in Singapore.
The rupee has lost nearly 2 percent against the dollar so far this week, heading for its largest weekly loss since the week ended November 20, according to Thomson Reuters data. The Singapore dollar was next in line, having shed 1 percent versus the greenback after gaining for four weeks. Dollar/won rose as investors covered short positions to take profits from the recent won's rallies after a Greek debt deal.
But South Korean exporters took the rise in dollar/won as chances to sell it on rallies, while some offshore hedge funds joined the move. The pair has room to rise more on short-covering with a major support at 1,110, near a 200-day moving average, although its downtrend stays intact, dealers said.
Short-squeeze lifted dollar/ringgit, but some local interbank speculators looked to sell the pair on rallies. A Kuala Lumpur-based dealer said he would sell it around 3.0300-3.0400 levels, saying the euro will stay firm. The 14-day dollar/ringgit Relative Strength Index (RSI) rebounded to above the 30 threshold, indicating the pair is not an oversold territory anymore.
But dollar/ringgit has a strong support at 3.00, around the 76.4 percent Fibonacci retracement level of its July-October rise. US dollar/Singapore dollar jumped above 1.2500 level on short covering. Philippine exports in December fell an annual 20.7 percent to $3.33 billion, the lowest value in two years, data showed.
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