Rebound on Greek austerity bill, led by Singapore dollar

SINGAPORE: The Singapore dollar rebounded on Monday, leading most emerging Asian currencies higher as Greece moved closer to securing bailout aid, attracting offshore funds to the region's assets, although investors remained reluctant to add bets.

Greek lawmakers approved a highly unpopular austerity bill to prevent a messy default, bolstering other riskier assets such as the euro and Asian stocks.

But investors were cautious as most emerging Asian currencies have priced in the vote result and players still expect hurdles before lenders agree on a bailout deal for the debt-ridden country, dealers and analysts said.

"It is difficult to say the deal would spur strong demand for emerging Asian currencies for now as hopes for a Greece deal have been widely reflected," said Jeong My-young, a currency strategist at Samsung Futures in Seoul.

"Asian currencies are still seen as technically overbought, although they would be supported by ample liquidity," Jeong added.

The regional units already faced a bout of profit-taking last week with the Indian rupee and the Singapore dollar snapping multi-week winning streaks amid worries about Greek uncertainties.

Despite the Greek approval, violent street protests in Athens and the departure of six cabinet ministers underscored the difficulty of implementing unpopular steps.

Euro zone finance ministers also expect Greece to explain details of an additional 325 million euros ($430 million) of total budget cuts this year, before they agree to the bailout in a meeting to be held on Wednesday.

Germany's finance minister, Wolfgang Schaeuble, said in an interview with German newspaper Welt am Sonntag that Greek promises on austerity measures are no longer good enough because so many vows have been broken.

The sustained ambiguity over the Greece may keep emerging Asian currencies in a tight range and slow inflows, although their bullish trend stays intact, dealers and analysts said.

The regional units need more momentum, especially from the global economy, to extend gains, they added.

Sacha Tihanyi, senior currency strategist for Scotia Capital in Hong Kong, said "a definite shift in regional growth momentum, with a pricing out of monetary policy easing," when asked what Asian currencies need to rise further.

"I am neutral personally for the time being, but with a bullish bias. The US is looking better of course, and improvement from Chinese PMI data doesn't hurt matters. The second-half will hopefully be better than the first," Tihanyi said.

Last week, weak China's trade data prompted investors to take more profits from the regional units.

SINGAPORE DOLLAR

Offshore funds unloaded US dollar/Singapore dollar with medium and long-term funds selling above 1.2600, dealers said.

The pair came under more pressure as the euro/dollar rose above 1.3250.

OCBC said in a note that any further improvements in risk appetite levels may exert pressure on US dollar/Singapore dollar towards the 1.2500 area.

The slide came as the Singapore dollar was the No.2 worst performing Asian currency last week with a 1.36 percent loss against the greenback.

Still, market players hesitated to sell the pair further around the current levels.

As long as US dollar/Singapore dollar stays above 1.2385, its low of Oct 31, then there is room for the US dollar to rebound to previous support levels of 1.2630-50.

WON

Dollar/won ended local trade lower on supplies from offshore funds and exporters including shipbuilders.

The pair earlier found support from short-covering but turned down with the euro's strength.

Foreign investors were net buyers of Seoul stocks for a sixth consecutive session.

RINGGIT

Dollar/ringgit slid, but sustained caution over the Greece contained selling interests.

"Before an agreement on further aid, nothing is certain," said a Kuala Lumpur-based dealer.

The dealer said the market has no choice but to square short-positions as the Greek strikes may mean the country's people may not accept the government's decision.