Emerging Asian currencies mostly steadied on Wednesday in thin trade, as investors were cautious of taking on fresh positions amid worries over the euro zone's debt crisis. The euro won a reprieve after plumbing new lows on the Swiss franc and Australian dollar but the single currency is seen stuck in a slow descent as a steady drip of grim ratings news erodes confidence in it.
"Despite the euro's rebound today, nobody is free from the eurozone's problems. That will not allow Asian currencies to keep rising," said a dealer at a US bank in Seoul. Portugal and Greece were both put on notice their credit ratings could be cut and fellow eurozone debtor Spain had to pay more to issue new debt on Tuesday, suggesting the currency bloc's crisis will rage unabated in 2011.
The won edged up after moving in a tight range in subdued trading on exporters demand for settlements and as foreign investors bought Seoul shares and bond futures. The won is expected to stay in a range between 1,150 per dollar and 1,160 until the end of the year, dealers said.
"I don't think the won will break through 1,150 or 1,160 either," said a local bank dealer said. Foreign investors bought a net 353.3 billion won ($305.9 million) in Seoul shares and 711.1 billion won worth of the country's three-year treasury bond futures, respectively.