Asian currencies rise

Most emerging Asian currencies nudged higher and the Taiwan dollar pulled away from a four-month low on Tuesday as investors took a break from the incessant selling of the past few weeks to await the outcome of emergency G7 talks on the euro zone's debt crisis.
Gains in Asian currencies could hence prove short-lived, especially if the Group of Seven talks disappoint. "We are seeing a pause in the selling of risk currencies such as EM Asia and risk assets in general," said Christopher Gothard, head of FX for Brown Brothers Harriman in Hong Kong.
Finance chiefs of the Group of Seven leading industrialised powers will hold a special conference call on the euro zone debt crisis on Tuesday in a sign of heightened global alarm about strains in the 17-nation European currency area. In addition, the European Central Bank's policy meeting is coming up on Wednesday.
"Still, economic data is worsening across the globe, and the financial and sovereign situation in Europe is showing no sign of improvement, so this pause in selling is just that - a pause," Brown Brothers Harriman's Gothard said. Last month, most emerging Asian currencies suffered from their largest monthly losses since September last year on mounting worries that Spain may need external aid to shore up its struggling banking sector.
Whether the G7 talks and the ECB meeting will provide a catalyst for a shift in trend is unclear, said Perry Kojodjojo, FX strategist for HSBC in Hong Kong. "The problem here is, if there is no positive news that will come out, it is possible that people may start putting on further long (dollar) positions," he said. The dollar might quickly raise beyond any technical resistance levels under those circumstances, Kojodjojo said. "In that case, even if there is a huge technical level, I would think it wouldn't provide much of a buffer," he said.
Some Asian currencies, such as the South Korean won, have seen a bit of consolidation in the past week or so, but still remain stuck near troughs hit in May. Others, such as the Malaysian ringgit and the Taiwan dollar, have fallen further at the start of June. The dollar rose to 30.070 versus the Taiwan dollar earlier on Tuesday, the greenback's highest level since mid-January. The dollar later came under pressure, and was last down 0.3 percent versus the Taiwan dollar at 29.973.
The dollar dipped 0.3 percent against the ringgit to 3.1900, having backed off an eight-month high of 3.2050 struck on Monday, according to Reuters data. Earlier, dollar-buying by macro hedge funds provided some support to the dollar against the ringgit. One possible support for the dollar against the ringgit lies near 3.1720, the greenback's intraday high hit on May 25 and a level that had previously been chart resistance.