SINGAPORE: The won and the ringgit led gains among emerging Asian currencies on Wednesday as firm US and European data boosted risk appetite, although some suffered from profit-taking on persistent worries about the euro zone's debt crisis.
Asian stocks and the euro pared rises, forcing investors to book profits from emerging Asian currencies rather than adding more positions, dealers and analysts said.
"The current 'rally' is driven by technicals. Since it coincides with better US data dump in past weeks, some shift in market expectation has taken place," said Andy Ji, Asian currency strategist for Commonwealth Bank of Australia in Singapore.
US manufacturing grew at its fastest pace in six months last month, while US construction rose to a near 1-1/2-year high in November, data showed. German unemployment also fell to the lowest in two decades.
"These positive data should gradually subside in coming months. In the short-term, these rallies (in emerging Asian currencies) offer better entries to long dollar due to continued bank recapitalization and deleveraging and seasonal dollar strength in January," Ji said.
Most emerging Asian currencies fell last year on deepening worries about the euro zone's debt crisis and glowing global economy.
On Wednesday, the won rose on improving risk appetite after those data, while South Korean importers bought dollars for settlements, limiting its gains. Some offshore players sold the won.
The South Korean currency is seen having resistance at 1,145 per dollar, around lows of Dec 21 and Dec 26.
But some dealers expect the local unit to rise further.
"Some players are hesitating to sell the pair (dollar/won) for now. But once we see offers linked to stock inflows and from offshore players, we will see lower levels," said a senior foreign bank dealer in Seoul.
Once the 1,145 line is cleared, the won may head to around 1,140 where a 55-day and a 60-day moving averages sit.
Foreign investors were buyers of Seoul shares again after purchasing net 321.8 billion Korean won ($279.64 million) on Tuesday, their largest daily purchase since Dec 21 last year.
The Thai baht also gained, but domestic importers purchased dollars, causing investors to cover dollar-short positions.
Investors are wary of possible dollar-buying intervention by the central bank to maintain export competitiveness, some dealers said.
"It's overdone," said a Bangkok-based dealer, referring to the opening price of 31.28 per dollar. "So, it's possible to cover short positions."
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