SINGAPORE -- A renewed rise in risk aversion buoyed the Singapore dollar on Monday while hurting others such as the Korean won after US authorities offered hefty aid to two embattled US mortgage lenders.
The US dollar edged up against the euro but stayed near a record low as the US Treasury increased its direct credit lines to mortgage giants Fannie Mae and Freddie Mac, and said it would buy their shares if necessary.
The Fed also made its direct lending window to financial firms available to them.
Analysts said, despite these measures, the fear of further weakness in the financial sector would dampen the risk appetite.
Traders in Asia also have to consider the likely outcomes of monetary policy meetings in Thailand and the Philippines this week, both expected to bring about higher interest rates.
"Overall, heightened risk aversion appears to be the answer for all of the above, which suggests that high beta Asia FX -- peso, baht and rupee -- will be pressured weaker," JPMorgan Chase said in a note.
The Singapore dollar viewed by investors as a safe bet in the region, inched up by 0.2 percent on the back of broad US dollar weakness.
"Majors are all moving in this direction, and MAS (central bank) wants the slow Singapore dollar appreciation to combat inflation, which has been the theme for some time," a Singapore-based trader said.
The Malaysian ringgit which often moves in tandem with the currency of its neighbor, also rose 0.2 percent, despite heightened political uncertainty ahead of opposition-led protests against the ruling party.
The ringgit hit its highest in almost four weeks at 3.2350 per dollar.
The Singapore dollar has firmed by 6.1 percent this year, and is Asia's third-best performer, after the yuan and Taiwan dollar.
Traders said the Singapore currency had encountered technical resistance at around 1.3550 per US dollar on Monday, and expected investors might go short on US dollars if the Singapore currency rose beyond 1.35.
On the other hand, the South Korean won fell by 0.3 percent to 1,005.4 per dollar, despite the country announcing plans to allow local branches of foreign banks to borrow more from their parent companies.
Traders suspected the climb in oil prices to another record high above $147.00 a barrel on Friday was weighing on won sentiment, since Korea imports almost all its fuel needs and higher crude prices boost demand for dollars.
South Korean authorities said they expect the easing of controls on short-term borrowings to bring in $10.0 billion into the country for the rest of the year, a finance ministry official said Monday.
That, analysts say, will help Korea's balance of payments which have been pressured by foreign portfolio outflows and a rising import bill.
The Philippine peso rose as much as 0.3 percent to 45.53 in morning trade, and a trader in Manila said he expected the peso to move within a range of 45.45 to 45.88 on Monday as investors awaited the central bank's monetary policy meeting on Thursday.
