The South Korean won and the Malaysian ringgit led solid gains among emerging Asian currencies on Monday as a Cyprus deal with international lenders for a bailout boosted appetites for risky assets. The won saw its best daily gain in nearly two months on demand from offshore funds and exporters. The ringgit was also on course to enjoy its largest daily appreciation since January 2 as interbank speculators covered short positions on exporters' demands.
The Singapore dollar hit a near three-week high as faster-than-expected inflation data bolstered expectations that the central bank will maintain a tightening policy bias. "There is more interest in selling dollars against some emerging Asian currencies around the current levels," said a European bank trader in Singapore, adding that the won and the ringgit might strengthen further.
Last week, most emerging Asian currencies slid as Cyprus reignited worries about the euro zone's debt crisis. The won ended local trade up 0.8 at 1,110.8 against the dollar, its largest daily percentage gain since February 4, according to Thomson Reuters data.
Demand from exporters for month-end settlements and offshore funds prompted local interbank speculators to square bearish bets on the South Korean currency. Still, the won faced chart resistance at a 200-day moving average of 1,108.3 per dollar as foreign investors kept selling Seoul shares. The ringgit rose 0.5 percent to 3.0975 against the dollar as of 0810 GMT. If the local currency maintains the gain, this would be the largest daily percentage appreciation since January 2 when it rose 0.8 percent, according to Thomson Reuters data.
Still, investors hesitated to push the ringgit firmer than a resistance level around 3.0900, with a current 200-day moving average at 3.0888, given caution ahead of a national election that must be called before the end of April. The Malaysian currency has been closing daily sessions weaker than the average since March 2. The ringgit has lost 1.2 percent against the dollar this year, Thomson Reuters data showed.
Maybank said in a note that the momentum was now with the ringgit and 3.0900 was in sight, but its gains were likely to be capped by uncertainties over the coming election. The Singapore dollar rose as much as 0.4 percent to 1.2436 to the US dollar, its strongest since March 6. The Taiwan dollar rose on demand from foreign financial institutions, mainly for shares, while local exporters also joined the bids, traders said. A firmer won also supported the island's currency.