Tuesday, November 8, 2011

EM ASIA FX-Ringgit, won fall as investors sell Asian FX

SINGAPORE (Nov 8): The Malaysian ringgit and the South Korean won fell on Tuesday as the euro zone's deepening debt crisis prompted investors to sell Asian currencies and other riskier assets.

The won had firmed earlier in the session after Fitch ratings raised its outlook for the country's rating to positive from neutral late on Monday, but it surrendered those gains later in the day on selling by offshore investors such as macro funds.

The Indonesian rupiah and the Taiwan dollar also gave up most of their initial gains as risk aversion led to general weakness in emerging Asian currencies. "I will be buying dollar/Asian currencies on dips.

"Italy is in the spotlight. So if anything, the euro should be better offered, keeping dollar/Asian currencies well supported," said a European bank dealer in Singapore.

The euro slid again on fears that a surge in Italian bond yields to their highest levles since 1997 and further political uncertainty in Greece may throw the region deeper into turmoil.

Italy's lawmakers are set to vote on budget reform later in the day, while Prime Minister Silvio Berlusconi fights to retain his post. Greece's outgoing prime minister and the opposition leader rushed to put in place a national unity government for just long enough to save their country from imminent default by implementing a new bailout programme.

PHILIPPINE PESO: Dollar/peso rose on corporate demand and on buying from domestic interbank speculators. "I am looking to buy (dollar/peso) on dips with EU worries not dissipating, we might see some test of the upside of the recent high of 43.13," says a European bank dealer in Manila, referring to the pair's session high on Nov 3.

RINGGIT: Dollar/ringgit gained on buying from interbank speculators and short term funds. Overall sentiment is still seen cautious towards further dollar buying as the crisis in Europe haunts markets. WON Dollar/won turned higher as offshore institutional investors such as macro funds bought it. The pair started local trade lower as domestic interbank speculators cut positions after Fitch Ratings upgraded South Korea's ratings outlook late on Monday.

Dollar/won is expected to trade in a range between 1,090 and 1,130.

SINGAPORE DOLLAR U.S. dollar/Singapore dollar rose on a weaker euro and Australian dollar. The pair may head to 1.2810 if it rises above an uptrend channel with parameters of 1.2660-1.2750. With the clear break of 1.2810, the level around the recent daily highs, it may test 1.2865, the session's high on Nov 3. The next major level is 1.2888, the 61.8 percent Fibonacci retracement of its October slides.

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