Won rises

The South Korean won rose on Tuesday as rebounding stock markets and expectations that China will allow the yuan to appreciate more rapidly enticed hedge funds and real money accounts back into emerging Asian currencies. Many investors remained cautious, however, before a Franco-German summit later in the day on the eurozone debt crisis.
Standard Chartered said it is re-entering real money portfolios with a bullish outlook for the regional units, a day after it advised Asian exporters to raise their currency hedging ratio. "We think Asia ex-Japan (AXJ) currencies will be among the prime beneficiaries of the asset reallocation process as the region's much stronger economic, balance-of-payments and debt fundamentals increase its attractiveness to investors," StanChart said in a note, adding it was significantly long the won, the Indonesian rupiah and the Indian rupee. The won rose on hedge funds' demand and as foreign investors turned to net buyers of Seoul stocks after nine consecutive sessions of net selling.
But the South Korean currency gave up some of its earlier gains as importers bought dollars for settlements and local interbank speculators added dollar positions. Some offshore players also sold the local currency. Investors remained reluctant to buy the won when it strengthened past 1,070.0, analysts and dealers said.
Foreign investors bought a net 661.1 billion Korean won ($612.6 million). The Philippine peso slightly rose but non-deliverable forward-fixing related dollar demand limited the currency's gains. Real money accounts tried to lift the Singapore dollar past 1.2000 per US dollar, but the central bank was spotted defending that level, dealers said.
The city-state's currency turned weaker on the intervention and a weaker euro. Last month when the Singapore dollar hit a record high of 1.1993 versus the greenback, Monetary Authority of Singapore was spotted defending the 1.2000 line, according to dealers. The Singapore dollar has been best performing emerging Asian currency with a 6.5 percent gain against the US dollar so far this year as investors sought the local currency in safe haven trades.