Sing dlr leads rebound, Asia outlook cautious

SEOUL: The Singapore dollar led a rebound among some emerging Asian
currencies on Tuesday with the euro recovering some losses but worries
about rising Spain's borrowing costs cast doubt over sustainability of
regional units' strength.
Many emerging Asian currencies
initially fell as Spain's bond yields jumped to euro-era highs and
higher Italian borrowing costs rekindled market concerns over the euro
zone's debt crisis.
On Monday, Spain's bond yields rose to 7.3
percent, undermining the country's ability to finance itself, less than
two weeks after the euro zone decided to lend Madrid 100 billion euro
($125.80 billion) to help its ailing banks. Italy's 10-year bond yields
also rose above 6 percent.
That came less than a day after
investors cheered a marginal victory of pro-bailout parties in Sunday's
Greek elections, which supported most emerging Asian currencies on
Monday.
Madrid is likely to pay record high borrowing rates at
debt auctions this week. The country's Treasury will issue 2 billion to
3 billion euros of 12- and 18-month debt on Tuesday and between 1
billion and 2 billion euros of bonds due in 2014, 2015 and 2017 on
Thursday.
"Investors remain cautious, and the tone is to sell on
rallies. Europe keeps disappointing, and any piece of good news is only
having a short-lived impact," said Frances Cheung, senior strategist at
Credit Agricole CIB in Hong Kong, adding emerging Asian currencies are
expected to stay weaker.
The Indian rupee is seen more
vulnerable after the central bank kept interest rates steady on Monday,
confounding market expectations for stimulus, Cheung said.
The
rupee weakened past 56.00 per dollar earlier and is seen heading to
record low of 56.52 hit on May 31 if the global risk aversion deepens,
while investors are keeping an eye on possible intervention to support
the currency by the Reserve bank of India, dealers said. SINGAPORE
DOLLAR
U.S. dollar/Singapore dollar slid on a rebound in the euro above 1.2600, while overall liquidity was thin.
Investors
are likely to stay on the sideline, waiting for the result of a policy
meeting of the U.S. Federal Reserve on Wednesday.
WON
Dollar/won
started local trade higher on rising Spain's borrowing costs, but
turned lower on exporters' dollar sales for settlements.
Some offshore players sold the pair, pushing it down, dealers said. BAHT
Dollar/baht slid on selling from offshore funds and gold investors, dealers said.
But
onshore interbank players bought the pair below 31.40 with importers'
bids and sustained concerns over the euro zone. - Reuters