Won, most Asia FX down on Greek woes; may stay weak

Some speculators reduced dollar holdings against emerging Asian currencies before the Federal Reserve's policy meeting later in the day, but renewed worries about the euro zone's debt crisis are expected to put sustained pressure on the regional units.

The Fed looks set to take a breather from monetary stimulus.

Even if the US central bank surprises by signaling more stimulus, that will not be enough to boost emerging Asian currencies unless markets see more progress on Europe's debt crisis, dealers and analysts said.

Dealers and analysts said some short-term investors appeared to slightly short emerging Asian currencies, while they have not seen big dollar demand from real money investors yet.

"The Fed will try to solve US problems and QE3 may be discussed. That will push down the dollar. But a big question is how much dollar/Asia could fall amid worries about Greece," said a senior Asian bank dealer in Kuala Lumpur, referring to further quantitative easing.

The dealer said he would not build up big positions either way for the rest of the week, waiting for a G20 summit of major economies on Thursday and Friday, as well as a vote of confidence in Greece's legislature.

Greek Prime Minister George Papandreou's call for a referendum on the 130 billion-euro ($180 billion) bailout package dampened riskier assets in the globe including stocks and commodities. Emerging currencies in other regions such as the Brazil's real and the Mexico's peso also fell.

"If Greece doesn't vote for the deal, it will be horrible," said Saktiandi Supaat, head of FX Research at Maybank in Singapore. "Markets are trying to price that in now bit by bit."

"We may see increasing long dollar positions against emerging Asian currencies, given the fluidity of the markets, before the referendum."

The regional units this week gave up their rising momentum from last month on renewed worries about the euro zone.

But some speculators are looking for buying those currencies, saying players already built up dollar-long positions to be cleared.

"The Greek referendum should be fully priced by now. So, I'm more keen to short (dollar/Asian currencies)" on belief the Greek leader will survive Friday's vote of confidence, a European bank dealer in Singapore said.

WON

Dollar/won rose as offshore funds and interbank speculators bought it on risk-off sentiment.

But exporters did not miss the chance to sell it as the pair found resistance at 1,128-1,135.

The pair has the 50 percent Fibonacci retracement at 1,128.6 of its rise between Aug and October and the other 50 percent retracement at 1,134.6 of its September-October rise.

The resistance was major support before being broken last week.

Continuous exporters' offers prompted stop-loss dollar sales, dealers said, while offshore funds showed two-way interests.

"I don't really like long positions here on sustained exporters' supplies, although I'm worried about external factors," said a senior local bank dealer in Seoul.

PHILIPPINE PESO

Dollar/peso rose above a 55-day moving average of 43.025 earlier on short-covering.

But the pair gave up some of the gains on remittance inflows, dealers said.

Philippines' financial markets were closed on Monday and Tuesday and the remittance inflows over the long holiday weekend were larger than on normal ones, they added.

A European bank dealer said the dollar/peso market appeared to neutral ahead of major events including the Fed's meeting.

SINGAPORE DOLLAR

US dollar/Singapore dollar gained on hedge funds' short-covering, briefly breaking through the 50 percent Fibonacci retracement at 1.2793 of its decline in October.

But the pair turned lower on the euro's rebound.

Euro/Singapore dollar is seen falling after failing to break the resistance at its 61.8 percent retracement of its April-September decline at 1.7700.

Copyright Reuters, 2011