The Singapore dollar led gains in other Asian currencies on Monday, with investors taking higher commodity prices as a green light to rebuild bets on regional emerging currencies, which may keep strengthening especially against the euro.
The Malaysian ringgit, the South Korean won and the Singapore dollar had major reversals higher against the euro late last week after hitting technical support, indicating they have more rooms to rise further versus the euro. The Singapore dollar rose against the US dollar as interbank speculators and leveraged investors bought it after the weekend's general election kept a ruling party in power.
Singapore's ruling party swept back to power as expected in the most contested general election since independence, although the opposition made historic gains and the prime minister signalled there would be change in the tightly governed city-state. The won gained on demand from hedge funds in Singapore and Hong Kong and exporters scooped up the local currency for settlements. One-month dollar/won non-deliverable forward was quoted at 1,083.5, implying it is a bit lower than spot dollar/won given the swap points of 2.35.
Euro/ringgit has failed just above the resistance area of 4.3900-4.4100, a series of previous highs going back over the past year, and appears poised to fall further if it sinks below 4.2775 and 4.2825, respectively a previous low on April 18 and the bottom of this year's trend channel.