SEOUL: Emerging Asian currencies rose on Monday led by the South Korean won and the Malaysian ringgit as the victory of pro-bailout parties in the Greek elections eased concerns over its possible exit from the euro zone and pushed up risk assets.
The won hit a one-month high on demand from offshore funds as foreign investors bought South Korean stocks, while the ringgit also touched a three-week high.
Parties supporting a bailout to save Greece from bankruptcy will start forging a government on Monday after a slim victory in Sunday's elections over the leftist Syriza party
The result, seen as crucial to European leaders' efforts to hold the euro together, lifted riskier assets with the euro jumping to one-month high and Asian stocks up nearly 2 percent.
But investors were reluctant to chase emerging Asian currencies further as such positive election results have been factored in to some degree, dealers said.
They are keeping an eye on major events such as the Group of 20 summit on Monday and Tuesday. The US Federal Reserve is to hold a policy meeting on Tuesday and Wednesday that could potentially increase monetary support for the economy.
"In the near, term Asian currencies can probably push higher from here but sentiment remains skittish. The Greek election has probably removed a tail risk around Greece's exit from the euro in the near term but it hasn't solved any long-term problems," said Jonathan Cavenagh, a senior FX strategist at Westpac in Singapore.
"So for the next 12 hours bias in Asian currencies should be higher but the market will be looking for the good news to continue to keep the positive momentum going," Cavenagh said.
Reflecting that caution, market participants took profits from emerging Asian currencies.
Investors stayed worried about many unsolved elements of Europe's debt crisis and sluggish global growth.
Spain has been pushed into seeking 100 billion euros from Europe to rescue its banks and Italy's poor growth prospects and high debt have put it in the bond markets' sights.
"There may be some room for risk aversion after the rally," said Saktiandi Supaat, head of FX research at Maybank in Singapore.
"Greece election results are a red herring. Spain and Italy factor is a key. It is going to be a long, drawn-out affair."
WON
Dollar/won earlier fell to as low as 1,156.7, the lowest since May 15 as some offshore players sold the pair and on exporters' supplies.
But it recovered some of initial slide as local interbank players added long dollar positions and state-run importers bought dollars on dips for payments, dealers said.
"I see few reasons to dump dollar/won yet. We may see risk-off again if the Fed disappoints markets," said a foreign bank dealer in Seoul, adding only minor offshore funds bought the won earlier.
RINGGIT
Dollar/ringgit slid to 3.1350 versus the greenback, the lowest level since May 28, but recovered some of fall as market players were wary of dollar demand from local pension funds, dealers said.
That caused interbank players to cover short positions.
"The market is cautious. Later when Europe opens, we should get lots of comments and statements. Then we will have new direction for the week," said a senior Malaysian bank dealer in Kuala Lumpur.
"But overall, I think we need to buy dollars and sell risk currencies because nothing has been changed in Greece," the dealer said.
PHILIPPINE PESO
Dollar/peso started at a session low of 42.100, but restored some of initial fall as investors took profit from the Philippine currency.
The peso has risen 4 percent against the dollar so far this year, becoming the best performing emerging Asian currency, as hedge funds recently bought pesos with the central bank's intervention largely absent.
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