Most emerging Asian currencies rose on Wednesday, driven by capital inflows and demand from offshore funds as investors remained hopeful that Greece will strike a debt restructuring deal, but local investors remained wary of further intervention by regional authorities. Taiwan's central bank was buying dollars to cap its currency's gains, while Malaysia's central bank may also be in the market, dealers said.
This comes at a time when many emerging Asian currencies are approaching major resistance levels. The outlook for regional units remains firm, given improved risk appetite, and they are expected to break through resistance levels if Greece succeeds in securing a 130 billion euro ($170 billion) rescue fund, analysts and dealers said.
Even though Greece is seen close to an agreement, its politicians have yet to accept to painful austerity measures to receive the second bailout package. They have delayed, once more, the deal deadline to Wednesday. US dollar/Taiwan dollar slid on stock inflows, while Taiwan central bank and importers supported the pair, dealers said. The central bank's demand for the greenback was relatively small around the current levels, but many local banks were lined up to buy the pair between 29.40 and 29.45, they add.
Foreign investors were net buyers in Taiwan stock market in the previous two sessions and market has had net inflows of T$15.7 billion ($531.24 million) so far this month until Tuesday. Dollar/won fell on selling by offshore funds and custodian, but its slide is limited as investors stay wary of possible intervention by South Korean FX authorities. The pair has a support line at 1,110, around a 200-day moving average. Investors are keeping an eye on demand linked to Lone Star's sale of a stake in Korea Exchange Bank (KEB) to Hana Financial Group.
Dollar/baht breached a support line at 30.80, near the 50 percent Fibonacci retracement of its July-January rise. The pair is expected to fall further, given improved risk appetite, dealers said. Dollar/baht may head to 30.67, the low of December. The next level would be 30.50, around the 61.8 percent retracement. Dollar/Philippine peso fell on inflows, although the central bank was spotted buying the pair, dealer said. Dollar/ringgit hit a five-month low on catch-up plays after holidays, falling to as low as 2.9950, the first time to breach the 3.0000 level since September 9.
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