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Subdued dollar helps some Asian units rise, South Korean won falls

FILE PHOTO: South Korean won, Chinese yuan and Japanese yen notes are seen on U.S. 100 dollar notes in this picture illustration taken in Seoul, South Korea, December 15, 2015. REUTERS/Kim Hong-Ji/File Photo

(Reuters) - Some Asian currencies inched higher on Wednesday as decade-low U.S. manufacturing activity data kept the dollar subdued, while South Korea’s won weakened after North Korea fired a ballistic missile.

The data on factory activity hit global equity markets as it increased worries about a slowing U.S. economy. [USD/] [nL2N26M0L5] [nL3N26N0ZQ]

South Korea said its neighbour fired at least one missile off its east coast, possibly from a submarine, one day after announcing the resumption of talks with the United States aimed at ending its nuclear programme. [nL3N26M4EQ]

“For the won, geopolitical risk premium is the main driver, with North Korea testing some missiles .. that typically triggers a pare back in long won positions,” said Chang Wei Liang, a macro strategist at DBS Bank in Singapore.

The South Korean won KRW=KFTC declined 0.5% in its second straight session of weakening. Dismal inflation and exports data had pressured the currency on Tuesday, after stoking bets of further monetary policy easing for the trade-reliant economy. [nL3N26L227]

The offshore yuan CNH=D3 traded 0.1% lower, while other Chinese markets remained closed on account of the National Day holiday.

The Singapore dollar SGD= edged down marginally, tracking weakness in the offshore yuan, while Indonesia's rupiah IDR= climbed slightly after two consecutive sessions of losses.

“The rupiah and rupee are more vulnerable to external portfolio flows, given they are current account deficit countries. If markets see a more significant pare back in risk taking, then these are the two currencies to keep an eye on,” said Chang Wei Liang.

Indian markets were closed on Wednesday for a public holiday.

Reporting by Devika Syamnath in Bengaluru; Editing by Richard Borsuk