Most emerging Asian currencies rose on Tuesday, led by the South Korean won and the Thai baht, on growing confidence Europe can contain its debt crisis and a record-high yuan fix, while some investors booked profit before Wednesday's eurozone summit.
The won strengthened past technical resistance lines and is expected to outperform its Asian peers with widened non-deliverable forwards (NDFs) spreads, but it gave up some of its early rises. "Those who put on long risk trades will not be adding, whereas those who missed out would rather wait for after the EU summit on Wednesday night," said a European bank dealer in Singapore.
"I'm afraid it could be a 'buy on rumour and sell on fact' thing. Investors are likely to trim down positions nearer the announcement day and much has been priced into this EU summit. So there could be room for disappointment," said Frances Cheung, senior strategist for Credit Agricole CIB in Hong Kong.
Dollar/won hit a five-week low of 1,124.5 on selling by offshore funds and by stock inflows. It broke through a 100-week moving average of 1,132.7 and the 50 percent Fibonacci retracement at 1,128.6 of its rise between August and October Dollar/baht slid as a dealer said offshore players including Japanese names sold it with the pair pressured by catch-up plays.
"Offshore players and Tokyo center sold USD this morning down to 30.77," said the Bangkok-based dealer. Thai financial markets were closed on Monday for a public holiday. Dollar/Philippine peso fell on risk appetite and inflows, but its falls were limited by a wider trade deficit in August.
Philippine imports in August rose 10.4 percent from a year earlier, the fastest growth in four months, government data showed. US dollar/Singapore dollar stayed in a tight range, with markets awaiting details of the EU's plan to tackle the debt crisis. The pair popped up to 1.2661 but retreated after fresh record-high yuan fix triggered selling interests. Failure to break 1.2600 on the central bank's intervention has stalled falls so far. Intraday jobbers are seen booking profits with leveraged names seen on both sides.