EM ASIA-Currencies shrug off Merkel comments, down for week

* Sing dlr down 0.7 pct for week; model funds sell it
* Ringgit dips on selling of macro accounts, foreign banks
* Won turns weaker despite exporters, stock inflows

(Adds text, updates prices)
By Jongwoo Cheon
SINGAPORE, Aug 17 (Reuters) - Most emerging Asian currencies
turned softer on Friday and were headed for weekly losses,
shrugging off gains in Asian shares after German Chancellor
Angela Merkel suggested she supports the European Central Bank's
efforts to tackle the zone debt crisis.
The Singapore dollar weakened the most followed by
the Malaysian ringgit on selling by hedge funds. The
South Korean won also lost ground on selling by offshore funds.
Merkel's comments that ECB President Mario Draghi's pledge
in late July to do whatever it takes to save the euro were
"completely in line" with the approach taken by European leaders
boosted stocks and the euro.
But emerging Asian currencies failed to benefit from them,
after initial gains, as investors were seen to have already
priced in hopes for the ECB action, dealers and analysts said.
"Telling people you will do 'whatever it takes' and doing
nothing is not a good sign. The market is still hopeful. But it
will be more of a grind than any line in the sand date for
action to take place," said a senior U.S. bank trader in
Singapore.
The trader drew attention to Finland's foreign minister's
comment on a possible breakup in the euro zone, saying that may
have stopped investors from buying into emerging Asian
currencies.
Most emerging Asian currencies have already weakened for the
week led by the Philippine peso as recent strong U.S.
economic data reduced expectations of more stimulus by the
Federal Reserve.
The peso has lost 1.1 percent against the dollar so far this
week, according to Thomson Reuters data, as investors took
profits from the best performing regional unit this year. The
Indian rupee and the Singapore dollar have lost 0.7
percent to the greenback, respectively.
"Asia FX is retracing based on the paring of bets that QE3
will arrive in force. They are not responding to 'risk on' to
the same degree as they are a bit richly priced relative to
economic fundamentals," said Sacha Tihanyi, senior currency
strategist for Scotiabank in Hong Kong, referring to the third
round of quantitative easing or the Fed's bond-buying programme.
Tihanyi said emerging Asian currencies were expected to ease
further.

SINGAPORE DOLLAR
The Singapore dollar eased on selling from local banks and
model funds although the Merkel's remarks increased appetite for
risky assets.
Market liquidity was thin as the city-state's financial
markets will be closed on Monday for the Hari Raya Puasa
holiday.

RINGGIT
The ringgit slid as macro funds and foreign banks sold the
Malaysian currency amid a weaker Singapore dollar. It has lost
0.5 percent against the U.S. dollar so far this week.
But traders hesitated to add any positions before a long
weekend.
Malaysian financial markets will be closed on Monday and
Tuesday to mark Hari Raya Puasa holidays.

PHILIPPINE PESO
The peso weakened as onshore investors sold it and on dollar
demand linked to non-deliverable forwards fixing, dealers said.
The Philippine unit found some relief as investors took
profits before a long holiday with Manila financial markets
closed on Monday for a holiday.

WON
The won started the domestic trade firmer and found support
from stock inflows and as South Korean exporters bought the
currency for settlements.
Foreign investors bought a net 345.3 billion won ($304.51
million) worth of Seoul stocks in the main exchange,
extending their buying spree to a ninth consecutive session.
But the South Korean unit turned weaker as offshore funds
sold it, prompting domestic traders to cut long positions in the
won, dealers said.
"Regardless of the euro and stocks, it looks better to buy
dollar/won below 1,130," said a senior foreign bank dealer in
Seoul, expecting the won to stay softer next week.
The won fell 0.3 percent against the dollar for this week.

TAIWAN DOLLAR
The Taiwan dollar edged up on exporters' demand,
especially when the local unit was weaker than 30.000 per U.S.
dollar, while foreign financial institutions limited its upside,
dealers said.
Traders expected the island's currency to stay in tight
range until they find fresh momentum from Europe and global
economy.

CURRENCIES VS U.S. DOLLAR
Change on the day at 0650 GMT
Currency Latest bid Previous day Pct Move
Japan yen 79.41 79.34 -0.09
Sing dlr 1.2520 1.2502 -0.14
Taiwan dlr 29.980 30.020 +0.13
Korean won 1133.97 1134.00 +0.00
Baht 31.51 31.53 +0.06
Peso 42.33 42.29 -0.08
*Rupiah 9485.00 9485.00 +0.00
Rupee 55.69 55.75 +0.11
Ringgit 3.1320 3.1285 -0.11
Yuan 6.3615 6.3658 +0.07

Change so far in 2012
Currency Latest bid End prev year Pct Move
Japan yen 79.41 76.92 -3.14
Sing dlr 1.2520 1.2969 +3.59
Taiwan dlr 29.980 30.290 +1.03
Korean won 1133.97 1151.80 +1.57
Baht 31.51 31.55 +0.13
Peso 42.33 43.84 +3.58
Rupiah 9485.00 9060.00 -4.48
Rupee 55.69 53.08 -4.69
Ringgit 3.1320 3.1685 +1.17
Yuan 6.3615 6.2940 -1.06
* Financial markets in Indonesia are closed for a holiday.

($1 = 1133.9500 Korean won)
(Additional reporting by Emily Chan in TAIPEI and IFR Markets'
Catherine Tan; Editing by Sanjeev Miglani

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Philippine peso Korean won
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