SINGAPORE: 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.
Meanwhile, Asian central banks are also likely to continue to intervene and slow the rise in their currencies to help support weakening exports, they added.
"The strength in Asia ex-Japan (currencies) is impressive considering the state of the global economy, though momentum seems to be improving. Thus intervention is to be expected," said Sacha Tihanyi, senior currency strategist for Scotia Capital in Hong Kong.
"I just can't get the euro zone out of my head. I think one should trade with the trend, but remain vigilant as it could turn should Greece give us negative headlines," he added.
Most emerging Asian currencies have risen this year, thanks to resumed foreign inflows amid high liquidity and growing hopes that the euro zone's debt crisis is easing.
TAIWAN DOLLAR
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.
WON
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.
A market source said the US private equity fund appears to still need to buy some $900 million.
"Everybody is reluctant to sell dollars here. So, even though dollar/won is seen sliding more, but it would be very slow," said a foreign bank dealer in Seoul.
Still, some dealers see low possibility of intervention as the country remains wary of inflation.
BAHT
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.
"A trend is very clear for Asian currencies, so market is waiting to sell (USD/THB) on rally," said a Bangkok-based dealer.
Dollar/baht may head to 30.67, the low of December. The next level would be 30.50, around the 61.8 percent retracement.
PHILIPPINE PESO
Dollar/Philippine peso fell on inflows, although the central bank was spotted buying the pair, dealer said.
"Especially after IDR got upgraded, punters are looking to PHP to be the next," said a Singapore-based dealer, referring to Indonesia's sovereign rating upgrade last month.
Remittance inflows are expected to put more pressure on the pair, the dealer added.
The central bank was spotted buying the pair around 42.30 initially, but lowered the bid level to around 42.20, dealers said.
RINGGIT
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 Sept 9.
Some dealers suspected the central bank of buying dollars to defend the 3.0000 support line, around the 76.4 percent retracement level at 2.9983 of its July-October rise.
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