Most Asian currencies fell on Monday, with market players reluctant to take on risk amid doubts that a European summit later this week will produce any concrete measures to stem the euro zone's sovereign debt crisis. The Singapore dollar was among the Asian currencies that were hardest hit, falling roughly 0.4 percent versus the US dollar.
The South Korean won and a few other currencies fell by a similar amount. However, the Indian rupee went against the grain and surged 1.1 percent to 56.51 a fter Finance Minister Pranab Mukherjee said on Saturday the government will unveil measures on Monday to arrest the currency's slide. The rupee had hit a record low of 57.32 to the dollar on Friday, and has fallen roughly 6 percent so far this year.
A focal point this week is whether a summit of European leaders on June 28-29 will produce measures that instil confidence in European policymakers' ability to stem the euro zone's debt crisis.
"It looks like there's still a lot of argument going on, at least between Germany and the rest of the stakeholders in Europe," said Sacha Tihanyi, senior currency strategist for Scotia Capital in Hong Kong. German Chancellor Angela Merkel again resisted pressure on Friday for common euro zone bonds or a more flexible use of Europe's rescue funds but agreed with leaders of France, Italy and Spain on a 130 billion euros ($156 billion) package to revive growth.
Trading in the dollar versus Asian currencies is likely to stay cautious and range-bound ahead of the European summit, said Saktiandi Supaat, head of FX research at Maybank in Singapore.
"People are cautious of taking positions for now on riskier assets," he said. The Singapore dollar retreated against the Malaysian ringgit and that drop helped drag the Sing dollar lower against the greenback as well, market players said. The Singapore dollar dipped 0.2 percent versus the ringgit to 2.4904, pulling back from a high of 2.5016 hit on Friday, the highest since August 2011 according to Reuters data.
The Singapore dollar looked heavy at levels near 2.50 against the Malaysian ringgit due to profit-taking, said a trader for a Malaysian bank in Kuala Lumpur. "I think we just may have seen the temporary high," the trader said, adding that the Singapore dollar may start to give back some of its recent gains and eventually head down toward 2.46 to the ringgit.