The Indian rupee rose on central bank buying, leading a rebound among emerging Asian currencies on Tuesday as investors covered short positions on strong German growth data and expectations regional authorities could intervene to support their units.
The German economy grew 0.5 percent in the first quarter on strong exports, well above market forecasts, helping the euro and other risky assets rebound. Still, investors hesitated to add bets on emerging Asian currencies on growing fears that Greece may exit the euro zone amid political uncertainty.
Earlier in the day, most emerging Asian currencies fell with the Indian rupee sliding to near a record low prior to the central bank buying, and the South Korean won was at its weakest in about four months. Regional units are expected to stay weak as investors are likely to shun risk positions on intensifying fears over Greece, analysts and dealers said.
"Nothing has been changed. The rebound is a just shallow one, although we may see bigger short-covering," said a senior Malaysian bank dealer in Kuala Lumpur. Dollar/won rose to as high as 1,156.8, the highest since January 12 on stock outflows and bids from offshore funds.
But the pair could not rise further, with resistance at 1,157.0, the 61.8 percent Fibonacci retracement of its December-March slide, and on caution over dollar-selling intervention by the foreign exchange authorities. Earlier, South Korea's Finance Minister Bahk Jae-wan said the won's recent movements were excessive relative to the country's fundamentals.
Foreign investors were net sellers in Seoul's main exchange for a 10th consecutive session, and have shed a net 2.2 trillion won ($1.91 billion) during that period. US dollar/Singapore dollar turned lower as real money investors and European investors sold it as the pair failed to stay above a technical resistance at 1.2587, the top of an Ichimoku cloud. The pair had been below the top since mid-January.
Investors stayed cautious over possible US dollar-selling intervention by central banks to check inflationary pressure. Dollar/peso hit a near five-week high of 42.83, but the pair turned lower on remittance inflows, while local banks took profits around a Fibonacci resistance, dealers said. Some local names sold the pair above 42.800, near the 61.8 percent retracement at 42.803 of its March-April slide, dealers said. Foreign banks continued to buy dollar/rupiah, while the Indonesian central bank was spotted limiting its gains, dealers said.