Tuesday, November 1, 2011

Ringgit, Sing dlr down; Asia FX may fall more

SINGAPORE (Nov 1):'' The Malaysian ringgit and the Singapore dollar fell on Tuesday, leading other regional currencies lower on worries the sagging global economy and slow progress on the European debt crisis may increase downward pressure on emerging Asian units.

Some offshore funds and interbank speculators intensified selling emerging Asian currencies when the euro fell below $1.38 on concerns over how measures agreed among the euro zone leaders could be implemented.

The regional units already came under pressure from data showing Asian economy continued to lose steam with China's factory activity last month at its slowest since February 2009 and South Korean exports' growth also at slowest in two years.

"I prefer playing USD/Asia from the long side so long as EUR fails to trade back above 1.4000," said Jonathan Cavenagh, foreign exchange strategist for Westpac in Singapore, although there are "event risks" later this week such as policy meetings by major central banks including the Federal Reserve.

"Growth momentum is still cooling within the Asian region so I ultimately think we get higher levels in USD/Asia in coming weeks," Cavenagh said he would sell the won on rallies if it strengthens to 1,100 per dollar again, where it reached on Monday -- near its 200-day moving average resistance of 1,100.40.

Greek Prime Minister on Monday called an unexpected referendum on the bailout deal for the debt-ridden country with the Italian bond under persistent selling pressure, renewing concerns over the continent's debt problem and dampening other risk assets such as Asian stocks.

With the worries, emerging Asian currencies lost their rising momentum from last month, although some speculators looked to chances to buy on dips. Those speculators hoped that the Group of 20 summit in on Nov 3-4 will produce more progress to deal with the euro zone's debt crisis.

"These are levels to sell all dollar/Asian currencies. In G20, they cannot deliver negative news," said a senior Asian bank dealer in Kuala Lumpur.

Some analysts shared the view, saying emerging Asian currencies are expected to stay in a range before major events this week. Emmanuel Ng, a currency strategist at OCBC Bank in Singapore, said he still favours the Singapore dollar, the ringgit and the South Korean won, although "entry levels would be a key".

RINGGIT Dollar/ringgit rose as speculators covered short positions on risk-off environment and closed a gap at 3.1000 seen late last week. The pair may rise to 3,1270, around the 50 percent Fibonacci level of its falls in October, if it ends the day higher than the 38.2 percent retracement at 3.1067. But some speculators sold dollar/ringgit after the pair filled the gap.

SINGAPORE DOLLAR U.S. dollar/Singapore dollar may rise to 1.2700, around 38.2 percent retracement of its falls last month after rising above the pivotal level of 1.2570-1.2590. Leveraged accounts and interbank speculators bought the pair.

RUPIAH Dollar/rupiah gained as offshore funds including leveraged funds bought dollar/rupiah non-deliverable forwards (NDFs). But investors stay cautious over possible dollar-selling intervention by the central bank, especially if the rupiah tests 8,900 per dollar. The central bank has not been spotted in the market yet, dealers said. WON Dollar/won rose on offshore funds' demand, but its rises were capped by exporters' selling. Foreign investors also continued to buy Seoul stocks, extending their buying spree to a four consecutive session. - Reuters

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