SINGAPORE: Asian currencies surged on Monday, with the Malaysian ringgit climbing more than 1 per cent at one point, as the euro zone's agreement to lend Spain up to 100 billion euros eased investors' jitters about Europe's sovereign debt crisis. Market players, however, said the rally could prove short-lived given worries that Greece's election on June 17 may rekindle fears of Greece leaving the euro zone. There are also persistent concerns about a slowdown in global growth. "The move to bail out Spanish banks has temporarily provided a relief rally," said Suresh Kumar Ramanathan, regional rates and foreign exchange strategist at CIMB Investment Bank in Kuala Lumpur. The help for Spain, however, does not diminish the risk of Greece exiting the euro zone in a disorderly manner and the contagion risk in the region "moving a notch higher", he said. The dollar fell to as low as 3.1530 versus the Malaysian ringgit earlier, down 1.1 per cent from 3.1895 in late Asian trade on Friday. The dollar later trimmed some of its losses and last stood at 3.1650, down 0.8 per cent. Euro zone finance ministers agreed on Saturday to lend Spain up to 100 billion euros ($125 billion) to shore up its teetering banks, with the currency group and Madrid saying the amount of the bailout would be sufficiently large to banish any doubts. The news gave an added lift to emerging Asian currencies, which had regained some ground last week after a relentless sell-off in May, when they took a hit from worries about Spain's fiscal and banking sector woes and concerns about the outlook for global economic growth. "The weekend announcement is positive for risk assets," said Charlie Lay, Asian currency analyst for Commerzbank in Singapore. "It should provide some temporary respite but whether we'll see follow-through rallies is another matter," he said. "For example, details of the bailout for Spain have yet to be determined, and there are also "increasing risks of a synchronised global slowdown", Lay said. Data released at the weekend showed China's inflation, industrial output and retail sales all flagged in May for a second straight month of sluggish growth, even as China's exports and imports figures came in much stronger than expected. "Chinese trade numbers may have beaten consensus, but the decline in consumer price index and producer price index tells us that Chinese domestic demand is coming off rapidly," said CIMB's Ramanathan. A Reuters poll published on Friday showed that analysts remain pessimistic about Asian currencies, with short positions on the Indonesian rupiah rising to their highest since the 2008 global financial crisis.

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