August 21, 2012 / 7:37 AM / 5 years ago

EM ASIA FX-Won leads Asia FX gains, but ECB uncertainty persists

* Won up as foreigners buy S.Korean stocks for 11th session
    * Taiwan dlr gains on inflows, exporters
    * Sing dlr edges up; resistance at 1.2500 vs U.S. dlr

 (Adds text, updates prices)
    By Jongwoo Cheon
    SINGAPORE, Aug 21 (Reuters) - Emerging Asian currencies rose
on Tuesday as stocks and the euro gained, but they appeared to
be capped by some investor uncertainty over the European Central
Bank's capacity to contain the euro zone debt crisis. 
    The South Korean won outperformed its Asian peers
as foreign investors kept buying local stocks, while the Taiwan
dollar enjoyed inflows from foreign financial
institutions.
    The currencies appreciated as Asian shares rose with
sustained hopes the ECB will act to lower the borrowing costs of
critically indebted members, even though officials denied a
report about the form of its planned bond buying strategy.
    "Investors are not disappointed yet because they expect no
action from policy makers in the summer anyway. So, this kind of
hopes for policy support may still continue until month-end,"
said Frances Cheung, senior strategist at Credit Agricole CIB in
Hong Kong.
    The ECB is scheduled to hold a policy meeting on Sept. 6 and
euro zone finance ministers will then meet in mid-September.
    But Cheung said investors will stay cautious, given
uncertainty over European debt markets.
    On Monday, the ECB brushed aside a report by German magazine
Der Spiegel that it was considering setting yield thresholds for
any moves to buy bonds, saying it was misleading to report on
decisions that had not yet been taken. 
    Germany's Bundesbank also stepped up its resistance on
Monday to a ECB plan to buy billions of euros worth of Spanish
and Italian government bonds. 
    "Markets want to buy a good story for now. But fundamentally
and technically, there is no reason to be so bullish on risk or
Asian FX," said BNP Paribas currency strategist Thio Chin Loo in
Singapore.
    Most emerging Asian currencies have edged lower since last
week as investors scaled back expectations of more stimulus from
the Federal Reserve after strong U.S. economic data.
    Last week, investors also squared bullish bets on regional
units before holidays in many of Asian countries to mark the end
of Ramadan on Monday. Financial markets in Indonesia, Malaysia
and the Philippines remained closed on Tuesday.
    
    WON
    The won gained as foreign investors continued to absorb
domestic stocks and on demand from exporters for month-end
settlements.
    Foreign investors bought a net 253.2 billion won ($222.97
million) worth of shares in Seoul's main exchange,
extending their buying spree to an 11th consecutive session.
    Still, investors hesitated to chase the won, given a lack of
 momentum behind it and a slowing global economy, dealers said.
    South Korean exports in the first 20 days of this month fell
12.4 percent from a year earlier, customs agency data showed
earlier, indicating the sustained euro zone's debt crisis kept
biting into the export-driven economy. 
    "Some onshore traders looked to buy the won on dips, but I
still believe it is better to sell it on rallies," said a senior
foreign bank dealer in Seoul, adding he would sell the won when
it is stronger than 1,130 per dollar.
    
    TAIWAN DOLLAR
    The Taiwan dollar rose on inflows from foreign financial
institutions and exporters' demand for month-end settlements.
    Higher local stocks also supported the island's
currency, dealers said.
    
    SINGAPORE DOLLAR
    The Singapore dollar edged up on hopes for inflows
and as the euro was resilient despite uncertainty over the ECB.
    The city-state found psychological resistance at 1.2500 per
U.S. dollar with a 38.2 percent Fibonacci retracement at 1.2498
of its depreciation early this month.
    Once the retracement is broken, the local unit is seen
having room to the 50 percent retracement at 1.2475.
      
  CURRENCIES VS U.S. DOLLAR
  Change on the day at 0640 GMT
  Currency    Latest bid   Previous day    Pct Move
  Japan yen        79.29          79.42       +0.17
  Sing dlr        1.2506         1.2526       +0.16
  Taiwan dlr      29.950         30.030       +0.27
  Korean won     1129.92        1135.50       +0.49
  Baht             31.45          31.52       +0.22
 *Peso             42.42          42.42       +0.00
 *Rupiah         9485.00        9485.00       +0.00
  Rupee            55.56          55.73       +0.31
 *Ringgit         3.1310         3.1315       +0.02
  Yuan            6.3568         6.3594       +0.04
 
  Change so far in 2012
  Currency    Latest bid  End prev year    Pct Move
  Japan yen        79.29          76.92       -2.99
  Sing dlr        1.2506         1.2969       +3.70
  Taiwan dlr      29.950         30.290       +1.14
  Korean won     1129.92        1151.80       +1.94
  Baht             31.45          31.55       +0.32
  Peso             42.42          43.84       +3.35
  Rupiah         9485.00        9060.00       -4.48
  Rupee            55.56          53.08       -4.46
  Ringgit         3.1310         3.1685       +1.20
  Yuan            6.3568         6.2940       -0.99
 * Financial markets in Indonesia, Malaysia and Philippine were
closed for holidays.
    
 ($1 = 1135.5750 Korean won)
 (Additional reporting by Miaojung Lin in TAIPEI and IFR
Markets' Catherine Tan; Editing by Eric Meijer)
 
   
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   Philippine peso      Korean won         
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