Emerging Asian currencies fell on Thursday with the Singapore dollar and the Malaysian ringgit breaching support lines, as investors cut risk exposure on fear over the European debt crisis and expect further falls in the regional units. Fast money accounts and interbank speculators sold the Singapore dollar, while the ringgit and the South Korean won came under pressure from dollar demand linked to dividend payments to foreign investors, dealers said.
France and German warned Greece that it will not receive any aid, which the debt-ridden country desperately needs to avoid a default, until Athens decides whether it wants to stay in the eurozone. "It is very hard to have any hope (from the G20 summit) after Greece threw everything out of the window and the EU leadership was angry at Greece," said a senior Asian bank dealer in Kuala Lumpur. The dealer said he would add dollar positions against emerging Asian currencies on dips.
US dollar/Singapore dollar rose above 1.2793, the 50 percent Fibonacci retracement of its declines in October. The pair is seen having room to rise more, probably to the 61.8 percent retracement at 1.2889, given the risk-off environment. Dollar/ringgit rose above the 61.8 percent retracement at 3.1473 of its October slides on dividend payment-linked demand.
If the pair ends the day above the line, it may head to 3.1724, the 76.4 percent retracement. Dollar/won rose on offshore funds' demand and short-covering by local interbank speculators. The pair found more support from demand related to corporate dividend payments to foreign investors. Dealers in Seoul estimated the dividend-linked dollar/won demand at about $300 million during the day. They also say immediate demand related to dividend payments to foreign investors appeared to have been satisfied.