* Ringgit jumps 2 pct after ruling coalition wins election
* Offshore funds, stock inflows lift ringgit; c.bank spotted
* Taiwan dlr up on exporters, foreign financial institutions
* Won at 2-mth high, but some take profits before 1,090/dlr
(Adds text, updates prices)
By Jongwoo Cheon
SINGAPORE, May 6 (Reuters) - The Malaysian ringgit looked
set to post its best single-day gain in three years on Monday as
the ruling coalition won a tight national election, easing
worries about potential policy instability.
Other emerging Asian currencies also rose as
stronger-than-expected U.S. job data on Friday buoyed riskier
assets.
The ringgit was up 2.0 percent at 2.9725 per dollar
as of 0625 GMT. If the ringgit maintains that strength, it would
be the largest daily percentage appreciation for the currency
since May 2010, according to Thomson Reuters data.
The currency firmed to as much as 2.9600 in early trade, its
strongest since August 2011, but gave up some of gains as the
central bank was spotted intervening to stem its appreciation,
traders said.
The governing coalition extended its half-centry rule
despite its worst-ever performance in a general election on
Sunday, winning 133 seats in the 222-member parliament.
Offshore funds chased the ringgit and the country's shares
hit a record high on stock inflows, traders and analysts
said, although the result is seen potentially undermining Prime
Minister Najib Razak and exposing growing radical polarisation.
"We believe political uncertainty has receded in the medium
term and that PM Najib should be able to continue to lead BN,"
Barclays said in a note, referring to the ruling coalition
Barisan Nasional.
"A clear mandate for the incumbent government against a
positive economic backdrop points to favourable outlook for the
ringgit," said Barclays, adding it revised up the ringgit's
one-month forecast to 2.9800 per dollar from the previous
3.0400.
Barclays also changed its three-month forecast to 2.9600
from 3.0400, its six-month forecast to 2.9400 from 3.0200, and a
12-month forecast to 2.9000 from 2.9800.
Before the election, investors had hesitated to add bullish
positions in the ringgit on worries that a potential opposition
victory may cause uncertainty over policy continuity in
Southeast Asia's third-largest economy.
So, the result is expected to spur more capital inflows,
traders and analysts said.
"There has been massive pent up demand which was hampered by
the elections. Now that it's out of the way think path clear
towards 2.8500/9000," said a senior source at a major Malaysian
bank.
Still, it is premature to say the ringgit is a one-way bet.
"One question which could hang over the MYR is whether or
not incumbent PM Najib will remain in power. Although BN's
return was far from disastrous, the results were still weaker
than in 2008 which could see his position come under pressure,"
HSBC said in a note.
"If that were to happen, then MYR volatility would likely
remain elevated until the future of the leadership is resolved,
having already pushed higher in the run up to the election."
Technically, the ringgit is seen excessively bought with
dollar/ringgit's 14-day relative strength index at 24.4, well
below the 30 threshold.
A leading below the level indicates the pair is seen
oversold.
Some analysts said Malaysia's export outlook remained weak
and government spending may now ease in coming quarters with the
election out of the way.
"Short term, it (the ringgit) will do well from election
euphoria but I think the gains will be limited since the export
cycle doesn't look too strong and there should be some fiscal
tightening post the election," said Sean Yokota, head of Asia
Strategy at Scandinavian bank SEB in Singapore.
He said he would not revise his 12-month target of 2.9000
per dollar.
TAIWAN DOLLAR
The Taiwan dollar advanced on sustained inflows
from foreign financial institutions and as the island's stock
market closed at a 21-month high.
Most Asian stock markets rose as Friday's strong U.S. job
report eased concerns about the health of the world's top
economy and Asia's major export market.
Local exporters bought the Taiwan dollar when it was weaker
than 29.500 per U.S. dollar, traders said.
But its upside was limited as the central bank was spotted
intervening, traders said.
SINGAPORE DOLLAR
The Singapore dollar rose 0.4 percent to 1.2290 to
the U.S. dollar, its strongest since Jan. 25, tracking a firm
ringgit and on strong U.S. job data.
But the currency pared initial gains with a chart resistance
at 1.2296, the 61.8 percent Fibonacci retracement of its
depreciation between October and March.
"We expect a certain degree of market caution towards
excessive downside in the USD-SGD, despite USD-MYR heaviness,
within a 1.2260-1.2370 range," OCBC Bank said in a note.
WON
The South Korean won gained up to 0.4 percent to
1,092.2 per dollar, its strongest since March 8, on demand from
offshore funds and domestic exporters.
But the won cut some of its earlier gains ahead of chart
resistance at 1,089.2, the 61.8 percent retracement of its
depreciation between January and April.
Some investors took profits on growing caution over possible
intervention by the foreign exchange authorities as the won
hit a near five-year high to the yen.
Against the Japanese currency, the won gained 0.5 percent to
11.0161 against the yen, its firmest since September 2008.
"Given intervention possibilities, it looks difficult to buy
the won against the dollar around 1,090. I'd like to add long
dollar positions there," said a foreign bank trader in Seoul.
CURRENCIES VS U.S. DOLLAR
Change on the day at 0625 GMT
Currency Latest bid Previous day Pct Move
*Japan yen 99.21 99.02 -0.19
Sing dlr 1.2308 1.2342 +0.28
Taiwan dlr 29.513 29.610 +0.33
Korean won 1094.25 1097.10 +0.26
*Baht 29.57 29.63 +0.19
Peso 40.88 40.91 +0.07
Rupiah 9732.00 9732.00 +0.00
Rupee 53.91 53.94 +0.05
Ringgit 2.9725 3.0325 +2.02
Yuan 6.1645 6.1556 -0.14
Change so far in 2013
Currency Latest bid End prev year Pct Move
Japan yen 99.21 86.79 -12.52
Sing dlr 1.2308 1.2219 -0.72
Taiwan dlr 29.513 29.136 -1.28
Korean won 1094.25 1070.60 -2.16
Baht 29.57 30.61 +3.52
Peso 40.88 41.05 +0.42
Rupiah 9732.00 9630.00 -1.05
Rupee 53.91 54.99 +2.00
Ringgit 2.9725 3.0580 +2.88
Yuan 6.1645 6.2303 +1.07
* Financial markets in Japan and Thailand were closed for a
holiday.
(Additional reporting by Roger Tung in TAIPEI and Lee Kyoung-ho
in SEOUL; Editing by Kim Coghill)
