The Malaysian ringgit and the South Korean won led gains among emerging Asian currencies on Monday as better-than-expected US jobs and hopes for European action to ease the eurozone's debt crisis spurred risk appetite. The ringgit hit a near three-month high against the dollar on demand from hedge funds, while the won touched its strongest in more than four months as offshore funds rushed to cover short positions.
"Too much optimism has been riding on hopes for central bank actions and I won't add any long Asian FX positions at the moment," said Frances Cheung, Credit Agricole CIB's senior strategist in Hong Kong. The ringgit rose 1.1 percent to 3.1000 per dollar, its strongest since May 16.
The Malaysian currency found psychological resistance at the level with a 50 percent Fibonacci retracement at 3.0983 of its depreciation between late February and early June. Technically, the local unit was seen almost overbought as the 14-day dollar/ringgit relative strength index (RSI) fell to 32.8, approaching the 30 threshold. An index below 30 indicates the dollar is excessively sold.
A foreign bank dealer in Kuala Lumpur said the ringgit will be able to strengthen past 3.1000 only if the euro breaks above 1.2450-60 versus the greenback. The euro stood at 1.2376. The won strengthened to 1,124.0 per dollar, its strongest since April 3, fuelled by stop-loss buying from offshore funds. The Singapore dollar hit 1.2403 versus the US dollar, its strongest since May 3, as offshore real money funds and interbank speculators bought it. The Philippine peso started local trade up 0.4 percent at the session high of 41.700 per dollar.