EM ASIA FX-Won jumps on pre-G20 inflows; election woes weigh on ringgit

Fri Feb 15, 2013 1:24pm IST

* Won up on stock inflows; ING's sale of KB stake eyed
    * ING deal may spur won bids as foreigners buy it - traders
    * Ringgit dips as election worries prompt dlr short-covering
    * Rupiah down on corp dlr demand, bond inflows limit

 (Adds text, updates prices)
    By Jongwoo Cheon
    SINGAPORE, Feb 15 (Reuters) - The won ended its best week in
14 months on Friday as foreign investors continued to snap up
South Korean stocks, leading weekly gains among emerging Asian
currencies, as global investors looked to a meeting of G20
officials for further signals on foreign exchange policy.
    The won rose 1.6 percent against the dollar for
the week, its largest percentage gain since the week ended Dec.
4, 2011, according to Thomson Reuters data.
    The Singapore dollar and the Philippine peso
 both looked set to rise 0.2 percent on the week, also
buoyed by inflows.
    While growing concerns over upcoming general elections
weighed on the Malaysian ringgit on Friday, it edged up
0.1 percent on the week. The Indonesian rupiah posted a
similar performance.
    That came as the yen paused in its recent weak trend ahead
of a a meeting of G20 finance ministers and central banks on
Friday and Saturday in Moscow.
    Russia's Deputy Finance Minister Sergei Storchak said the
passage on currencies in a G20 communique will not single out
Japan's expansive policies, but officials are expected to spar
over the moves, which have sharply and swiftly driven down the
yen.
    Over the last two weeks, optimism over emerging Asian
currencies has recovered, with investors rebuilding bullish bets
on the won, a Reuters poll showed on Thursday. 
    Still, investors say gains in regional units will be kept in
check as the yen is expected to remain weak due to Japan's
reflationary policies and deficits. 
    "Regardless of the G20 meeting result, the yen will fall
again as the market will focus on Japan's trade and current
account deficits," said Yuna Park, a currency and bond analyst
at Dongbu Securities in Seoul.
    "Other Asian currencies will follow, especially the ones of
Japan's competitors, although the impact may be weaker on a few
others, like the peso, which are less sensitive to Japan," Park
added.
    Some emerging Asian currencies fell this year as a weaker
yen bit into their export competitiveness in overseas markets.
    Regional authorities have expressed concern about the
negative spillover effects from massive easing policies
undertaken by several major central banks over the last year.
    Some Asian policymakers have warned of possible measures to
stem their currency appreciation or better manage capital flows.
    Still, Japan is likely to keep pushing reflationary
policies.
    Japan Prime Minister Shinzo Abe is close to selecting his
nominee for central bank governor and the possible leading
candidate may step up the Bank of Japan's monetary stimulus,
sources said. 
    "A new governor and the prospects of a weakening trend in
place for the JPY will shape the direction of currencies," CIMB
Investment Bank said in a note.
    "That said, for Asian units that have continued to hibernate
in the early part of the year, a jolt in the form of a policy
shift will likely see Asian units eventually caving in to the
JPY weakness."
    
    WON
    The won touched 1,076.6 per dollar, its strongest since Jan.
25 on demand from offshore model accounts and exporters. It
found more support from demand linked to foreign investors'
stock purchases.
    Traders expected dollar supplies linked to ING's 
sale of a 5 percent stake in South Korea's KB Financial Group
. Some speculated about dollar offers linked to the
deal.
    The Dutch financial service group said it sold the shares
for about $672 million to institutional investors.
 
    Traders in Seoul said the won may find more support as
foreign investors take parts of the stake, with speculation that
ING may have completed selling the won for repatriation.
    "We may see only dollar supplies from the deal, as ING may
have already hedged," said a senior foreign bank dealer in
Seoul.
    Technically, the won is seen having room to 1,075.3, a
55-day moving average. The next level would be 1,074.5, its low
on Jan. 25.
    
    RINGGIT
    The ringgit slid as interbank speculators scrambled for
dollars in thin trading on increasing caution over the upcoming
election.
    Malaysian parliament will only be dissolved when all
quarters, including the people, are ready for the polls, Prime
Minister Najib Razak was quoted by national news agency Bernama.
    Najib also said: "very soon, very soon, do the job first, do
not worry," when asked how close the dissolution of parliament
was, according to Bernama.
    "Nobody will go home with short dollar/ringgit positions,"
said a Malaysian bank dealer in Kuala Lumpur, adding the ringgit
may head to 3.1140 to the greenback, its low on Jan. 31 when the
Malaysian currency suffered from bond outflows and selling from
real money funds.
    That level was softest since Sept. 7 last year, but the
ringgit showed signs of being excessively sold on Jan. 31 with
dollar/ringgit's relative strength index (RSI) above the 70
threshold.
    The trader said investors were worried too much about the
election.
    "The dollar/ringgit was up only due to election talks,
nothing else. So, you need to be very careful with long dollar
positions," the trader said.
    The trader said he will add dollar positions around 3.0900
but will not buy greenback more near 3.1000.
    Next week, domestic exporters may rush to buy the ringgit
for settlements, traders said.
    
    RUPIAH
    The rupiah eased on dollar demand from local corporates with
domestic banks buying the greenback around 9,660 per dollar,
traders said.
    However, freign banks bought the rupiah near 9,680, which
traders said was linked to bond inflows, limiting its downside,
traders added.
    On Thursday, Indonesia's finance ministry raised 9.95
trillion rupiah ($1.03 billion) at a debt auction, higher than
its indicative target of 7 trillion rupiah. 
    The central bank took more steps to stabilise the rupiah.
    Bank Indonesia said on Thursday it ordered the suspension of
export licenses of a number of small exporters who failed to
report their foreign currency earnings. 
    Still, investors remained worried about the country's
current account deficits.
    "Foreign ownership of govies have improved in recent months
but USD/IDR may remain dislocated from portfolio inflow
developments pending the expected improvement in the current
account," OCBC Bank said in a note, referring to the government
bonds.
    
  CURRENCIES VS U.S. DOLLAR
  Change on the day at 0700 GMT
  Currency    Latest bid   Previous day    Pct Move
  Japan yen        92.75          92.90       +0.16
  Sing dlr        1.2358         1.2348       -0.08
 *Taiwan dlr      29.725         29.750       +0.08
  Korean won     1077.20        1083.80       +0.61
  Baht             29.85          29.83       -0.07
  Peso             40.61          40.64       +0.07
  Rupiah         9660.00        9657.00       -0.03
  Rupee            53.98          53.92       -0.12
  Ringgit         3.0930         3.0900       -0.10
 *Yuan            6.2325         6.2325       +0.00
 
  Change so far in 2013
  Currency    Latest bid  End prev year    Pct Move
  Japan yen        92.75          86.79       -6.43
  Sing dlr        1.2358         1.2219       -1.12
  Taiwan dlr      29.725         29.136       -1.98
  Korean won     1077.20        1070.60       -0.61
  Baht             29.85          30.61       +2.55
  Peso             40.61          41.05       +1.10
  Rupiah         9660.00        9630.00       -0.31
  Rupee            53.98          54.99       +1.87
  Ringgit         3.0930         3.0580       -1.13
  Yuan            6.2325         6.2303       -0.04
 * Financial markets in China and Taiwan were closed for
holidays.
($1 = 9659.5000 Indonesian rupiahs)

 (Additional reporting by Lee Kyoung-ho in SEOUL; Editing by Kim
Coghill)
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