July 2, 2012 / 4:16 AM / 5 years ago

EM ASIA FX-EU deal lifts Asia currencies, but profit-taking caps gains

SINGAPORE, July 2 (Reuters) - Most emerging Asian currencies
rose on Monday, with the South Korean won hitting a near
two-month high, after a European agreement aimed at easing the
region's debt crisis.
    The won, the Philippine peso and the Malaysian ringgit
gapped higher against the dollar, but early gains were partially
rolled back as players booked profits on the jump, especially as
some regional currencies neared technical resistance lines.
    Despite the firmer tone in riskier assets globally, many
investors were sceptical over how long the rally on last week's
European deal would last, noting the region's debt-laden and
slowing economies remained highly vulnerable to further shocks. 
    On Friday, euro zone leaders agreed to let their rescue fund
inject aid directly into stricken banks and intervene on bond
markets to support troubled members. They also took a step
towards banking union by pledging to create a single banking
supervisor. 
    Weak factory activity data from Asia also kept players from
building up large positions in regional currencies.
    A factory slump in Asia's two biggest exporters China and
Japan deepened in June, while the South Korean factory sector
shrank for the first time in five months and Taiwan
manufacturing activity contracted for the first time since
January.  
    "I would be cautious on Asian ex-Japan FX," said Saktiandi
Supaat, head of FX research at Maybank in Singapore.
    "Any euro zone announcement surprises tend to taper off. It
is a firefighting exercise. The smoldering fire under the ground
is still burning."
    Reflecting the concerns, the euro gave up some of its gains
from Friday, although Asian shares rose.
    The ringgit rose 0.4 percent against the dollar as
interbank players bought the Malaysian currency, but they
covered short positions with the euro's retreat.
    "I would like to go long dollar/Asia back. When the EU
euphoria dies, dollar/ringgit will rise toward 3.1800 and the
euro will be back to 1.25," a senior Malaysian bank dealer in
Kuala Lumpur.
    The Thai baht gained from Friday's domestic close,
but dealers in Bangkok said it was slightly weaker than the New
York close of around 31.55/57 on Friday.
    The baht was boosted late on Friday as gold investors sold
dollars versus the local unit.
    "The baht looked overbought from Friday night, so we are
seeing some dollar rebound this morning," a Bangkok-based
dealer.
    The South Korean won strengthened to 1,140.0 per
dollar, the strongest since May 9, but importers' dollar demand
limited its upside.
    The won currently has a 200-day moving average at 1,143.2.
The local currency has been closing local trade above the
average since September.
    Its 100-day moving average stands at 1,141.9. The average
has not been cleared since May.
    The local currency was the best performing emerging Asian
currency in the previous two weeks with a 1.8 percent gain
against the dollar, according to Thomson Reuters data.
    "Its rise was seen a bit fast and it is not a good level to
chase. We need more exporters' demand to lift it further," said
a senior foreign bank dealer in Seoul.
    The Singapore dollar eased as it faced resistance
at 1.2660 versus the greenback, the 50 percent Fibonacci
retracement of its April-June appreciation. This coincides with
a 55-day moving average at 1.2659.
        
  CURRENCIES VS U.S. DOLLAR   
  Change on the day at 0350 GMT
  Japan yen        79.73          79.79       +0.08
  Sing dlr        1.2682         1.2675       -0.06
  Taiwan dlr      29.851         29.900       +0.16
  Korean won     1142.80        1145.40       +0.23
  Baht             31.60          31.75       +0.47
  Peso             41.98          42.12       +0.35
  Rupiah         9390.00        9385.00       -0.05
  Rupee            55.56          55.61       +0.08
  Ringgit         3.1670         3.1778       +0.34
  Yuan            6.3478         6.3541       +0.10
 
  Change so far in 2012
  Currency    Latest bid  End prev year    Pct Move
  Japan yen        79.73          76.92       -3.53
  Sing dlr        1.2682         1.2969       +2.26
  Taiwan dlr      29.851         30.290       +1.47
  Korean won     1142.80        1151.80       +0.79
  Baht             31.60          31.55       -0.16
  Peso             41.98          43.84       +4.44
  Rupiah         9390.00        9060.00       -3.51
  Rupee            55.56          53.08       -4.46
  Ringgit         3.1670         3.1685       +0.05
  Yuan            6.3478         6.2940       -0.85
 

(Reporting by Jongwoo Cheon; Editing by Kim Coghill)
 
   
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   Singapore dollar    Thai baht          
   Taiwan dollar       Hong Kong dollar   
   Philippine peso      Korean won         
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