The Singapore dollar and the Malaysia ringgit led gains in Asian currencies on Wednesday as short-term investors cut dollar holdings with regional stocks rebounding, but doubts remained over the sustainability of those gains as Japan's nuclear crisis appeared to worsen.
On Tuesday, Japan's deepening Japan's nuclear crisis prompted investors to dump riskier assets from currencies to stocks and commodities, with the Singapore dollar suffering its biggest daily percentage loss in almost four months. The Singapore dollar rebounded as speculative interbank bought it on Japanese stocks' gains.
On Wednesday, it lost 1.2 percent against the US dollar, the biggest daily percentage fall since November 23 last year. The ringgit gained as short-term investors reduced dollar-long positions on exporters' demand for settlements. Later European players bought the Malaysian currency. The won rose as exporters' demand for settlements and local investors cleared dollar-long positions. Earlier, the South Korean currency turned lower on heightened worries about Japan's nuclear crisis, but rebounded again with caution over possible dollar-selling intervention by the foreign exchange authorities to check inflation.
On Tuesday, the authorities were suspected selling the greenback as the won hit a fresh 2-1/2-month low, dealers said. Still, market players remained doubtful if the won could rise more. The peso weakened to as soft as 43.94 per dollar, just off a support line at 43.97, the 50-percent Fibonacci retracement of its January-March gain. If the local currency clearly breaks through the level, it has room to slide more, probably to 44.16, the 61.8 pct retracement.
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