EM ASIA FX-G20 green-light on yen makes Asian currencies see red

Mon Feb 18, 2013 1:43pm IST

* Offshore funds sell won vs dlr; won near 5-yr high to yen
    * Singapore dlr down as exports disappoint
    * Rupiah dips on corp dlr demand; stock inflows limit slide
    * Baht largely ignores strong domestic growth figures
    * Taiwan dlr up on exporters, stock inflows after holidays

 (Adds details, updates prices)
    By Jongwoo Cheon
    SINGAPORE, Feb 18 (Reuters) - The South Korean won led
declines among emerging Asian currencies on Monday as broad
weakness in the yen after a G20 meeting fueled concerns about
weakening export competitiveness in the region.
    The Singapore dollar was also pressured by on
disappointing January export data, while the Malaysian ringgit
 and the Indonesian rupiah eased on dollar
demand from local corporates.
    The G20 on Saturday declined to single out Tokyo but
committed to refrain from competitive devaluations and said
monetary policy would be directed only at price stability and
growth. Japan said this has given it a green-light to pursue its
policies unchecked. 
    "This allows for further JPY weakness without undue external
political pressure, and thus consequent softness in a number of
Asian currencies -- KRW, TWD in particular -- and perhaps a lack
of appreciatory impetus in CNY and its fixing rate," Sacha
Tihanyi, senior currency strategist for Scotiabank, said in a
note.
    The yuan eased after China's central bank set a slightly
weaker midpoint.
    Japan's Prime Minister Shinzo Abe said the central bank's
monetary policy is not directly aimed at weakening the yen, but
is among key factors driving exchange-rate moves.
 
    The yen slid to 94.20 to the dollar in early Asian
trade, nearing a 33-month low set a week ago. 
    The Japanese currency also fell against Asian peers, hitting
a near five-year low to the won.
    "Japan will keep seeking the current policy. The rest of
Asia will not just wait and see. That will put more pressure on
Asian currencies," said Yuna Park, a currency and bond analyst
at Dongbu Securities in Seoul.
    "The outlook for emerging Asian currencies for this year is
not as bright as earlier, given continuous talk of regulatory
measures within the region. That will also reduce attractiveness
of their bonds," Park added.
    Last week, many emerging Asian currencies saw weekly gains
as investors snapped up regional units on expectations that the
G20 may express concerns over the yen's recent weakness.
    Most emerging Asian currencies have softened so far this
year as a weaker yen is seen hurting competitiveness of its
Asian export rivals such as South Korea and Taiwan.
    Regional authorities have complained about the negative
spillover effects from massive easing policies undertaken by
several major central banks over the last year. 
    Some Asian policymakers had warned earlier this year of
possible measures to stem the appreciation of their currencies 
or better manage capital flows.
    
    WON
    The won fell against the dollar on selling from
offshore funds as investors see South Korea as more sensitive to
a weaker yen than other emerging Asian countries, given the two
countries' competition in key export markets.
    Global conflict over currency policy has emerged as a new
key risk to South Korea's financial system, whereas concerns
about the Chinese and U.S. economies have abated, a Bank of
Korea survey also found. 
    Caution grew over possible intervention by the foreign
exchange authorities as the won hit 11.4717 to the
yen, its strongest since October 2008.
    Still, traders hesitated to sell the won to the dollar
further after the won rose 1.6 percent last week, its largest
weekly percentage gain since December 2011.
    "The won will definitely follow the yen. But I wonder if the
yen will fall further in the short term on market talk of hedge
funds' short-covering of dollar/yen," said a senior foreign bank
trader in Seoul.
    
    SINGAPORE DOLLAR
    The Singapore dollar extended early losses after data showed
its non-oil domestic exports in January rose merely 0.5 percent
from a year earlier, far missing a 3.3 percent growth forecast.
 
    Shipments in January also fell a seasonally adjusted 1.8
percent from the previous month, disappointing investors, which
had expected a 9.6 percent gain.
    OCBC Bank said the disappointing non-oil domestic exports,
coupled with broad supportive tone for the dollar, should see
the Singapore dollar search out weaker ground in the near term
within a range between 1.2350 and 1.2450.
    Still, the currency found chart support at 1.2415, a 200-day
moving average. It has been closing firmer than the average
daily since last June.
    
    RINGGIT
    The ringgit eased on dollar bids from domestic importers in
thin trading, while investors stayed cautious over the upcoming
general election, which must be called by the end of April.
    But it recovered some of initial losses as the yen recouped
some of its early slide, traders said.
    "The market was digesting the G20 meeting. We were just
playing in a range of 3.09-3.11," said a Malaysian bank trader
in Kuala Lumpur, referring to the ringgit's value to the dollar.
    
    RUPIAH
    Sustained dollar demand from local companies put pressure on
the rupiah, but stock market inflows limited the downside in the
Indonesian currency, traders said.
    Indonesian shares hit a record high.
    A Jakarta-based traders said the rupiah may find more
support from stock inflows, expecting it to move between 9,630
per dollar and 9,690 this week.
    "If the stock market keeps performing well, we might see
more dollar selling from foreign banks on the back of equity
inflows," the trader said.
    Last week, foreign investors bought $236 million worth of 
Indonesian shares, Nomura International data showed.
 
    
    BAHT
    The baht edged lower, tracking weakness in its Asian peers.
    Currency investors showed muted reactions to
much-stronger-than-expected fourth-quarter growth data.
    Thailand's economy grew a robust 3.6 percent in the last
three months of 2012 from the previous quarter, highlighting the
resiliency across much of Southeast Asia which is continuing to
attract large fund flows.
    The strong data reinforced expectations that the central
bank will leave its policy settings on hold this week, despite
sustained pressure from the government to cut rates.
 
    
    TAIWAN DOLLAR
    The Taiwan dollar gained after the week-long Lunar
New Year holidays, bucking overall slides in emerging Asian
currencies.
    Domestic exporters bought the island's currency for
settlements, while higher local shares attracted some
foreign inflows, currency traders said.
    But traders hesitated to buy the Taiwan dollar too
aggressively as the currency is likely to be under pressure from
a weaker yen.
    The central bank was spotted buying small amount of U.S.
dollars to stem the local currency's gains, traders said.
    
  CURRENCIES VS U.S. DOLLAR
  Change on the day at 0730 GMT
  Currency    Latest bid   Previous day    Pct Move
  Japan yen        94.03          93.49       -0.57
  Sing dlr        1.2397         1.2372       -0.20
  Taiwan dlr      29.642         29.750       +0.36
  Korean won     1082.19        1078.30       -0.36
  Baht             29.89          29.86       -0.10
  Peso             40.63          40.60       -0.06
  Rupiah         9678.00        9667.00       -0.11
  Rupee            54.26          54.22       -0.07
  Ringgit         3.0980         3.0930       -0.16
  Yuan            6.2377         6.2325       -0.08
 
  Change so far in 2013
  Currency    Latest bid  End prev year    Pct Move
  Japan yen        94.03          86.79       -7.70
  Sing dlr        1.2397         1.2219       -1.44
  Taiwan dlr      29.642         29.136       -1.71
  Korean won     1082.19        1070.60       -1.07
  Baht             29.89          30.61       +2.41
  Peso             40.63          41.05       +1.05
  Rupiah         9678.00        9630.00       -0.50
  Rupee            54.26          54.99       +1.35
  Ringgit         3.0980         3.0580       -1.29
  Yuan            6.2377         6.2303       -0.12
 
 (Additional reporting by Miao-jung Lin in TAIPEI; Editing by
Kim Coghill)
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