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EM ASIA FX-US rate view hurts Asia FX; won feels heat of Samsung Note 7 debacle
October 12, 2016 / 5:41 AM / a year ago

EM ASIA FX-US rate view hurts Asia FX; won feels heat of Samsung Note 7 debacle

* Samsung Galaxy Note 7 scrap may hit Korea exports -analyst
    * Ringgit over 7-month trough on disappointing output data
    * EM Asian currencies recover losses on pound rebound

 (Adds text, updates prices)
    By Jongwoo Cheon
    SINGAPORE, Oct 12 (Reuters) - Most emerging Asian currencies
fell on Wednesday as expectations grow of a U.S. interest rate
hike in December, but they later pared losses as the British
pound's rebound hurt the dollar.
    The South Korean won fell to its weakest in more
than three weeks as Samsung Electronics Co Ltd's 
decision to scrap its fire-prone Galaxy Note 7 is seen hurting
exports. 
    Malaysia's ringgit hit an over seven-month trough
after factory output in August rose less than expected.
 
    The Thai baht slumped to a near four-month low as
Bangkok shares lost almost 3 percent, far
underperforming regional peers.
    The dollar on Tuesday touched its highest since March
against a basket of six major currencies as investors priced in
around a 70 percent chance of the Federal Reserve's tightening
in December.
    The U.S. currency also found support as Democratic
presidential nominee Hillary Clinton widened her lead in opinion
polls over Republican rival Donald Trump for the Nov. 8
election.
    The greenback broadly eased on Wednesday in Asia as sterling
 clawed back some of its recent losses, but sentiment
towards emerging Asian currencies stayed bearish.
    "Asian currencies are likely to weaken further into U.S.
elections and the Fed meeting with sustained expectations of
tightening," said Christopher Wong, a senior FX strategist for
Maybank in Singapore.
    "Inflationary pressures are likely to pick up if we continue
to see oil prices stabilising at current levels as demand-supply
rebalances. The U.S. is the one who is capable to tightening
first."
    
    WON
    The won lost 0.4 percent to 1,124.8 per dollar, its weakest
since Sept. 19.
    The halt to production of the Note 7 and strikes at Hyundai
Motor Co are expected to reduce South Korea's
exports in the fourth quarter by 3.4 percent, said HI Investment
& Securities.
    Samsung is the world's top smartphone maker and Hyundai the
world's fifth-largest automaker.
    "Lower exports along with higher oil prices are likely to
hurt the country's trade account. That will ease upward pressure
on the won or lift dollar/won," the brokerage said.
    Samsung's decision is also likely to reduce dollar supply
from the company for export settlements, traders said.
    Exporters' demand for the won is a usual supporting factor
for the currency.
    "Samsung usually sells dollars whenever necessary rather
than taking hedging positions. After the step, such dollar
supply may decrease," said a South Korean bank trader in Seoul,
referring to Samsung's move on Note 7.
    Foreign investors kept selling Samsung's shares. They sold a
net 473.9 billion won ($422.3 million) worth of Seoul shares
 by early afternoon and Samsung accounted for nearly half
of the selling, a local brokerage data showed.
    
    RINGGIT
    The ringgit lost 0.5 percent to 4.1900 per dollar, its
weakest since March 1.
    The Malaysian currency came under further pressure from
falling government bond prices. Foreign investors cut
the country's bond holdings in September, central bank data
showed. 
    "We tactically lowered our outlook on MGS from neutral to
mildly bearish," said Winson Phoon, fixed income analyst at
Maybank Investment Bank, in Kuala Lumpur, referring to Malaysian
Government Securities.
    Phoon expected the 10-year bond yield to rise to
3.65-3.70 percent by the end of this year. The yield is now
around 3.596 percent.
    He also said foreign investors may reduce Malaysian bond
holdings given expectations of a U.S. rate hike.
    The currency may weaken to 4.2027, the 61.8 percent
Fibonacci retracement of its appreciation in this year, analysts
said.
    
    CURRENCIES VS U.S. DOLLAR
    Change on the day at 0500 GMT
  Currency                Latest bid   Previous day   Pct Move
  Japan yen                   103.56         103.50      -0.06
  Sing dlr                    1.3784         1.3794      +0.07
  Taiwan dlr                  31.605         31.613      +0.03
  Korean won                 1122.10        1120.40      -0.15
  Baht                         35.42          35.30      -0.34
  Peso                        48.605         48.520      -0.17
  Rupiah                       13015          13010      -0.04
 *Rupee                        66.53          66.53       0.00
  Ringgit                     4.1820         4.1700      -0.29
  Yuan                        6.7198         6.7185      -0.02
                                                              
  Change so far in 2016                                       
  Currency                Latest bid  End prev year   Pct Move
  Japan yen                   103.56         120.30     +16.16
  Sing dlr                    1.3784         1.4177      +2.85
  Taiwan dlr                  31.605         33.066      +4.62
  Korean won                 1122.10        1172.50      +4.49
  Baht                         35.42          36.00      +1.64
  Peso                         48.61          47.06      -3.18
  Rupiah                       13015          13785      +5.92
  Rupee                        66.53          66.15      -0.57
  Ringgit                     4.1820         4.2935      +2.67
  Yuan                        6.7198         6.4936      -3.37
  * Indian financial markets are closed for holidays. Trading
will resume on Thursday.

 (Reporting by Jongwoo Cheon; Additional reporting by Choonsik
Yoo and KyoungHo Lee in SEOUL; Editing by Kim Coghill)

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