The won rose to a one-month high on Wednesday, leading other Asian currencies and the euro higher, after South Korea's pre-emptive move to prevent a cash crunch surprised investors and triggered an unwind of hedges against further weakness in the currency.
Exporters, real money accounts and hedge funds chased the South Korean currency higher, while interbank players dumped dollar positions after Seoul and Tokyo agreed to expand their currency swaps more than five fold. The swap deal triggered a broad move higher in the Singapore dollar, Indonesian rupiah and Malaysian ringgit, with investors interpreting the swap as favourable for risk taking because it was aimed at preventing instability in the market in emerging Asia most dependent on short-term foreign funding.
"Offshore funds sold dollars to unwind long dollar positions, which they had built before to hedge. I see more of a dollar decline as exporters are getting more active," said a senior foreign bank dealer in Seoul. In the third quarter, the won saw the biggest quarterly loss in three years as investors cut risk positions on worries about the eurozone's debt crisis.
The won was as firm as 1,128.4 per dollar, the strongest since September 19, breaking through a 100-week moving average of 1,133.0. US dollar/Singapore dollar slid as interbank speculators sold it on the euro's rebound. The pair briefly broke through a support at 1.2600, near the 50 percent retracemnt of its rise between late July and October as the euro recovered the $1.38 level. But dollar/Singapore dollar rebounded to above 1.26 on the euro retreated. Dollar/ringgit fell on the euro's recovery, but it has a firm support around 3.1057, the 38.2 percent Fibonacci retracement of its rises from 2.9320 to 3.2130 between late July and October.
Comments
Comments are closed.