SINGAPORE: Emerging Asian currencies fell on Thursday, with the South Korean touching a five-month low, as investors sought refuge in the greenback on mounting worries of a potential Greek exit from the euro zone.
Signs of slowing growth in key economies such as China, and near the close of the Asian trading day, from Germany, further curbed appetite for risky currencies.
"The vulnerability is still quite apparent, and in addition to recorded portfolio outflows, the European uncertainty may also be triggering more discretionary dollar buying in Asia," said Emmanuel Ng, foreign exchange strategist at OCBC Bank in Singapore.
The won fell 0.7 percent against the dollar and the Indian rupee, the worst Asian performer this year, slid 0.5 percent. The Philippine peso also lost 0.5 percent.
The Singapore dollar and the Taiwanese dollar, however edged up as investors covered short positions helped by steady Asian stocks. Expectations of intervention also supported these currencies, traders said.
"We are buying Asia FX on dips today for a slight bounce in risk assets," said a senior Malaysian bank dealer in Kuala Lumpur.
"USD/Asia became heavy. But risk-off theme is still alive," the dealer added.
Short-covering was triggered as most emerging Asian units were seen as oversold, dealers and analysts said. The 14-day relative strength index of most dollar/Asia ex-Japan currencies was above the 70 threshold, Thomson Reuters data showed.
European Union leaders at a meeting on Wednesday said they wanted Greece to stay in the euro zone while honouring commitments it had made in return for its bailout.
Senior euro zone officials at the same time are preparing contingency plans in case Greece exits.
Underlining fears of a wider slowdown, surveys showed Germany's manufacturing sector has been shrinking at the fastest rate in three years in May, while French business activity also sank further.
The surveys sent the euro to a 22-month low against the dollar.
Within Asia, a private sector survey showed China's factories faltered in May as export orders fell to two month lows, suggesting that the surprise weakness in April's hard economic data persists even as policymakers seek to shore up growth in the world's No.2 economy.
WON
Dollar/won ended local trade at a session high of 1,180.5, the highest since Dec. 19 as offshore funds bought the pair. Local investment trust firms also joined the bids.
Some local interbank players covered short-positions, which they had built earlier on expectations for selling by the foreign exchange authorities.
Caution over intervention hightened as dealers said the authorities had been spotted offering dollars above 1,170. They were spotted selling one-month dollar/won non-deliverable forwards (NDFs) overnight, dealers said.
"Everybody was surprised as the authorities did not defend the 1,180 line," said a senior foreign bank dealer in Seoul.
"Unless they intervene, dollar/won will rise further as dollar demand is much stronger than supply," the dealer added.
Dollar/won's next target would be 1,185.0, the high of December 19.
Foreign investors extended a selling spree in South Korea's main stock market to a 17th consecutive session, matching a record of March 2009 after the Lehman Brothers' collapse.
During the latest selling streak, they dumped a combined net 3.9 trillion won ($3.33 billion), according to the Korea Exchange.
SINGAPORE DOLLAR
US dollar/Singapore dollar slid as funds took profits.
But the pair found support from strong bids between 1.2730-1.2750.
PHILIPPINE PESO
Dollar/peso rose on increasing worries about Greece's exit from the euro.
Earlier, the pair gave up some of initial rise on profit-taking, but extended gain on a weaker euro.
A European bank dealer in Manila said dollar/peso is seen heading to 43.75 and 44.20 as it stayed above 43.50, the 61.8 percent Fibonacci retracement of its 44.34-42.12 move.
"People are already long and would likely take profits first on the rallies before resuming further upside," the dealer said.
"But its upside looks intact for now and only a break of 43.30 would reverse the upside momentum."
TAIWAN DOLLAR
US dollar/Taiwan dollar fell as Taiwanese exporters sold the pair for month-end settlements in thin trading.
But interbank players hesitate to join the offers on sustained worries about Greece's exit from the euro zone.
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