SINGAPORE: Most emerging Asian currencies fell on Monday as the outcome of elections in Greece and France reignited worries about the euro zone debt crisis although some units were supported by caution over intervention by local foreign exchange authorities.
The South Korean won led declines, dropping to a near two-week low, while the Singapore dollar also touched its lowest in about three weeks, as offshore funds sold the two currencies as the election hurt appetite for risky assets.
Emerging markets may be heading for greater volatility and capital outflows if the Greek election leads to a review of the bailout programme, said Dariusz Kowalczyk, Credit Agricole CIB's senior economist and strategist in Hong Kong.
The two pro-bailout parties in Greece have failed to win a majority in the parliament, casting doubt over the future of a combined response to the crisis, which is seen as crucial in holding the currency bloc together.
"The same could happen if more pro-growth policies of the new French government leads to fiscal tensions in the region. Thus, in the short run, risk aversion is the name of the game," Kowalczyk said.
French socialist Francois Hollande swept to victory in France's presidential election, ousting incumbent Nicolas Sarkozy who had played a key role in structuring bailout schemes for indebted euro zone members and pushed for strict fiscal policies aimed at managing huge debts, in close cooperation with German Chancellor Angela Merkel.
The elections came at a time when investor sentiment was already soured after weak US April payrolls data on Friday boosted concerns over the world's top economy.
The region's currencies recovered on caution over likely intervention by central banks to slow their slides.
Bank Indonesia was spotted buying the rupiah, while Reserve Bank of India may have also bought rupees, dealers said.
Some currencies were also supported by technicals as the euro recovered to 1.30 in the early European session.
Some analysts and dealers said worries about Greece's austerity measures were premature.
"There is not much room (for Greece) to avoid austerity measures," said Andy Ji, Asian currency strategist for Commonwealth Bank of Australia in Singapore.
Even though he sees more downside in the euro on the European Central Bank's dovish stance, emerging Asian currencies may rebound gradually, saying "cyclical outlook should improve gradually."
"Buying (emerging Asian currencies) in dips at current levels is becoming more attractive," Ji said.
WON
Dollar/won rose to 1,140, the highest since April 25, as offshore funds and South Korean importers bought the pair.
But local exporters sold dollars near the session's high, as the pair faced resistance at 1,140.3, the 76.4 percent Fibonacci retracement of its April slide, while some traders also said they were cautious about intervention.
"It can rise above 1,140, but I'd like to sell dollars there. Despite risk-off sentiment, market forces may not help further rises. I don't know why market players are not that interested in lower oil prices," said a foreign bank dealer in Seoul.
Brent crude oil hit its lowest level since late January.
SINGAPORE DOLLAR
US dollar/Singapore dollar rose to 1.2526, the highest since April 19 on short-covering by macro funds and leveraged accounts.
But the pair cut some of initial gains after the central bank's deputy managing director Ong Chong Tee said the authorities are committed to price stability in the medium term and monetary policy should temper but not fully offset cost pressures from the supply side.
It also faced resistance between 1.2528-1.2539 for now.
US dollar/Singapore dollar has been closing below the average since April 12.
"It may get another round of buying in the Europe session, but with the UK on holiday it may not be big today. I think we're probably done," said a European bank dealer in Singapore.
RINGGIT
Dollar/ringgit rose on short-covering, but rise was limited by selling from local investors and exporters, given resistance at its 100-day moving average.
Its 100-day moving average stands at 3.0683 currently. The pair has been below the average since mid-January.
The pair also faced resistance at 3.0726, which is the top of the daily Ichimoku cloud. The next resistance is seen at 3.0735, the 76.4 percent Fibonacci retracement of its March-May slides.
RUPIAH
Dollar/rupiah rose on demand from foreign and local banks in Indonesia, while domestic corporates chased it, dealers said.
State-run banks on behalf of the central bank sold the pair at 9,205-9,210, they added.
"Many banks backed by corporate and clients' demand are still bidding a lot of USD with some even willing to pay much higher than screen prices," said a Jakarta-based dealer.
The dealer expects the pair to rise to 9,300, given bearish sentiment on the country.
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