Most Asian currencies rose on Monday as investors bought riskier assets after European Union leaders agreed to a rescue package for Greece, with gains in the Singapore dollar sparking official intervention. The euro jumped to 1.3692 from $1.3488 in New York on Friday after investors who had sold it scrambled to cover short positions, weighing broadly on the dollar.
Euro zone finance ministers approved a 30 billion euro ($40.5 billion) aid package of loans for Greece if needed, with 10 billion euros also expected from the International Monetary Fund, a move likely to calm markets in the short term.
WON: The won rose in both onshore and offshore markets. One-month offshore dollar/won non-deliverable forwards dipped to 1,112 from 1,117.6 late on Friday. The spot won briefly hit a 19-month high at 1,111.3 per dollar but later pulled back to 1,114 as investors were wary of a dollar-buying intervention by authorities. Local importers also bought dollars to settle accounts.
"Investors are reluctant to chase it more as the authorities are expected to defend certain levels," said a dealer. Seoul shares fell 0.8 percent with foreign investors sellers of a net 49.2 billion won worth of stocks on the main exchange.
SINGAPORE DOLLAR: The Singapore dollar rose half of a percent to 1.3838 per US dollar - the highest in just over four months, prompting the central bank to intervene. "The intervention makes Singapore dollar's appreciation much slower," said a Singapore-based trader.
Ten out of 18 analysts expect the central bank, which manages the currency within a secret trade-weighted band against a basket of currencies, to keep its zero appreciation policy at a review on Wednesday. Emmanuel Ng, strategist at OCBC Bank, believes Singapore dollar is now around 1.6 percent above the band's central parity compared with the upper ceiling of 2 percent managed by the central bank. "We think there is a 55 percent probability of a reversion to a gradual and modest appreciation," Ng said.
BAHT: The baht lost as much as half of a percent to 32.38 per dollar in line with local stocks, bucking a bullish trend for most Asian currencies due to the political turmoil.
Thailand's government could propose early elections to defuse a month-long political crisis, a newspaper reported on Monday, although opposition "red shirts" say the time for talks is over after clashes between anti-government protesters and security forces killed 21 people. Traders said expectations that Beijing will allow the yuan to strengthen provided some support for the baht. "Without the former, the baht could fall much deeper today," a Bangkok-based trader said. The baht is still up 3.35 percent so far this year.