EM ASIA FX-S.Korea warnings hit won, Thailand concerned over baht

Wed Jan 30, 2013 1:40pm IST

* S.Korea says it may tighten capital flow controls
    * Thai PM worried about baht's impact on exporters - finmin
    * Philippine peso up on stock inflows; wary of intervention

 (Adds texts, updates prices)
    By Jongwoo Cheon
    SINGAPORE, Jan 30 (Reuters) - The won fell on Wednesday as
South Korea warned it might tighten capital flow controls to
cope with the currency's strength, while Thailand's top
officials expressed concern over the baht's gains, capping its
appreciation.
    South Korea warned speculative investors against betting on
the won rising fast and said it would consider new
measures similar to the Tobin Tax, or a levy on financial
transactions, if needed in the future. 
    The won, which was lower for the day before the comments
from Deputy Finance Minister Choi Jong-ku, slid to 1,087.5 per
dollar afterwards as they prompted offshore funds to sell the
currency, dealers said.
    "The country showed strong determination that it would not
just wait to be slapped by Japan's policies," said Jeong
My-young, Samsung Futures' research head in Seoul, referring to
Tokyo's reflationary economic measures, which have dragged the
yen lower.
    Earlier this month, the Bank of Japan eased monetary policy
further, but Japan's government is still pressing the central
bank for more steps to revive the economy and fight deflation.
    In recent months, investors have been seeking
higher-yielding currencies in the rest of Asia with cheap money
printed by major central banks including the BOJ. In early
January, some  emerging Asian currencies hit multi-year highs
against the yen.
    This has created headaches for Japan's neighbours,  
especially South Korea, which are losing export competitiveness
and seeing hot money inflows. South Korea's key export
industries such as cars and electronics compete with Japanese
firms.
    South Korea has not been the only country warning about
speculative capital inflows. Last week, China's foreign exchange
market regulator made similar warnings.
    On Wednesday, Thai Finance Minister Kittirat Na Ranong said
that Prime Minister Yingluck Shinawatra is worried that the
baht's strength will hurt exporters and wants to look at ways to
handle capital movements. 
    "Globally, there is a mood to accept currency defense...
South Korea's push for more regulations on NDFs could be
accelerating," Jeong of Samsung Futures said, referring to
non-deliverable forwards.
    Choi said that South Korea may increase the weighting of NDF
positions when calculating the total amount of derivatives
subject to the country's derivatives rules.
    Meanwhile, most emerging Asian currencies edged higher as
healthy U.S. data brightened the global economic outlook and
Asia's major export markets, while investors were waiting for
the Federal Reserve's monetary policy decision later in the day.
    
    WON
    The won started the day firmer and strengthened to 1,078.8
per dollar earlier on demand from exporters for month-end
settlements and stop-loss dollar selling among offshore funds.
    But the South Korean currency turned lower as foreign
investors kept selling Seoul shares.
    The won's slide deepened after the government's warnings on
capital flows and speculation.
    
    BAHT
    The baht rose on exporters' demand and as local shares
 hit their highest since November 1994 on hopes for
continuous foreign inflows.
    This year, the Thai currency has been the best performing
emerging Asian currency, helped by bond and equity inflows.
    Recently, a popular trade among investors has been buying
the baht against the Singapore dollar, dealers said.
    On Tuesday, the baht touched 24.05196 to the city-state's
currency, its strongest since December 2011.
    The baht has a chart resistance at 24.03853, a 200-week
moving average.
    
    PHILIPPINE PESO
    The peso strengthened on equity-linked inflows and demand
from interbank speculators.
    A foreign bank dealer in Manila said the peso's appreciation
may accelerate.
    "They would likely want to wait for a dollar/peso's bounce
back above 40.70 to reinstate shorts. But I don't think people
can wait for the bounce anymore," the dealer said.
    But investors were wary of possible intervention by the
central bank to prevent it from breaking 40.60, dealers said.
    They were also cautious before the Fed's policy decision.
    
    RUPIAH
    The rupiah's indicative price fell 0.8 percent to 9,750 per
dollar in thin trading on month-end dollar demand from local
importers.
    The country's trade deficit likely hit around $2 billion
last year, Trade Minister Gita Wirjawan said.
    The Indonesian currency edged up in the forward market with
the one-month dollar/rupiah non-deliverable forwards
 down 0.2 percent to 9,790.
    
  CURRENCIES VS U.S. DOLLAR
  Change on the day at 0805 GMT
  Currency    Latest bid   Previous day    Pct Move
  Japan yen        91.09          90.75       -0.37
  Sing dlr        1.2353         1.2337       -0.13
  Taiwan dlr      29.542         29.559       +0.06
  Korean won     1085.20        1082.50       -0.25
  Baht             29.75          29.84       +0.30
  Peso             40.63          40.74       +0.27
  Rupiah         9750.00        9670.00       -0.82
  Rupee            53.42          53.76       +0.65
  Ringgit         3.0760         3.0782       +0.07
  Yuan            6.2199         6.2243       +0.07
 
  Change so far in 2013
  Currency    Latest bid  End prev year    Pct Move
  Japan yen        91.09          86.79       -4.72
  Sing dlr        1.2353         1.2219       -1.08
  Taiwan dlr      29.542         29.136       -1.37
  Korean won     1085.20        1070.60       -1.35
  Baht             29.75          30.61       +2.89
  Peso             40.63          41.05       +1.05
  Rupiah         9750.00        9630.00       -1.23
  Rupee            53.42          54.99       +2.95
  Ringgit         3.0760         3.0580       -0.59
  Yuan            6.2199         6.2303       +0.17
 
 (Additional reporting by Reuters FX Analyst Rick Lloyd and IFR
Markets' Catherine Tan; Editing by Richard Borsuk)
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