The Singapore dollar rebounded on Monday, leading most emerging Asian currencies higher as Greece moved closer to securing bailout aid, attracting offshore funds to the region's assets, although investors remained reluctant to add bets.
Greek lawmakers approved a highly unpopular austerity bill to prevent a messy default, bolstering other riskier assets such as the euro and Asian stocks.
But investors were cautious as most emerging Asian currencies have priced in the vote result and players still expect hurdles before lenders agree on a bailout deal for the debt-ridden country, dealers and analysts said.
"It is difficult to say the deal would spur strong demand for emerging Asian currencies for now as hopes for a Greece deal have been widely reflected," said Jeong My-young, a currency strategist at Samsung Futures in Seoul.
The sustained ambiguity over the Greece may keep emerging Asian currencies in a tight range and slow inflows, although their bullish trend stays intact, dealers and analysts said.
Sacha Tihanyi, senior currency strategist for Scotia Capital in Hong Kong, said "a definite shift in regional growth momentum, with a pricing out of monetary policy easing," when asked what Asian currencies need to rise further.
Offshore funds unloaded US dollar/Singapore dollar with medium and long-term funds selling above 1.2600, dealers said.
OCBC said in a note that any further improvements in risk appetite levels may exert pressure on US dollar/Singapore dollar towards the 1.2500 area.
The slide came as the Singapore dollar was the No.2 worst performing Asian currency last week with a 1.36 percent loss against the greenback.
Still, market players hesitated to sell the pair further around the current levels.
As long as US dollar/Singapore dollar stays above 1.2385, its low of October 31, then there is room for the US dollar to rebound to previous support levels of 1.2630-50. Dollar/won ended local trade lower on supplies from offshore funds and exporters including shipbuilders.