September 4, 2017 / 6:57 AM / 10 months ago

CORRECTED-EM ASIA FX-Won slips to 2-week low after N.Korean missile launch; yuan firms

 (Corrects paragraph 3 to say gold prices rose to a 10-month
high, not 10-year high)
    By Ambar Warrick
    Sept 4 (Reuters) - Most Asian currencies were largely
subdued on Monday, with the exception of the won, after North
Korea conducted a hydrogen bomb test that raised tensions in the
Korean peninsula.
    North Korea on Sunday conducted its sixth and most powerful
nuclear test, which it said was of an advanced hydrogen bomb,
prompting the threat of a "massive" military response from the
United States if it or its allies were threatened.
    The heightened geopolitical tensions had sent investors
flocking in early trade to safer assets. The Japanese yen
rose against the dollar during the day as investors looked to
safe haven-buying, while gold prices rose to a 10-month high.

    "I think there's still going to be some residual nervousness
in the markets as we wait for the U.S. and the rest of the world
to respond to North Korea's latest provocation," Khoon Goh, head
of Asia research at ANZ Banking Group in Singapore, said. 
    The South Korean won finished at a more than
two-week low against the dollar, although it did recover
slightly from its fall during the day.
    "While some of the weakness we saw in the morning has
unwound, I think markets are going to be subdued for a while,"
Goh added.
    The Taiwan dollar touched a near 3-month high
against the dollar, while the Singapore dollar and the
Indian rupee were mostly unchanged.
    The Chinese yuan on the other hand rose to a more
than 15-month high against the dollar after the region's central
bank raised its official yuan midpoint to its
strongest level since June 2016.
    "We think the yuan's upward trend is unlikely to be derailed
 for two reasons. First, as China is the world's second-largest
net creditor, the yuan may actually benefit from safe haven
flows. Second, should the North Korea situation worsen, the
dollar yield may fall due to risk aversion," OCBC Bank said in a
    The Malaysian ringgit did not trade on account of a
national holiday.
    The South Korean won fell against the dollar on Monday, but
regained some ground. The won lost about 0.8 percent in August
as tensions with its neighbour in the north prompted investors
to pull money out of the country.
    South Korean stocks also slid on Monday, with the Korea
Composite Stock Price Index (KOSPI) hitting its lowest
since Aug. 11.
    South Korea's finance minister vowed on Monday to implement
policies to support financial markets if instability caused by
North Korea's latest nuclear weapons test shows signs of
spreading to the real economy.
    "It is likely we could see further foreign investor outflows
from South Korea in response to the latest test," Khoon Goh
  Change on the day at   0604 GMT                               
  Currency                         Latest bid  Previou  Pct Move
                                                 s day  
  Japan yen                        109.580      110.25     +0.61
  Sing dlr                         1.358        1.3573     -0.03
  Taiwan dlr                       30.100       30.156     +0.19
  Korean won                       1131.600     1122.8     -0.78
  Baht                             33.170        33.17     +0.00
  Peso                             51.170        51.17     +0.00
  Rupiah                           13336.000     13342     +0.04
  Rupee                            64.030        64.02     -0.02
  Yuan                             6.548        6.5596     +0.18
  Change so far in 2017                                         
  Currency                         Latest bid  End      Pct Move
  Japan yen                        109.580      117.07     +6.84
  Sing dlr                         1.358        1.4490     +6.72
  Taiwan dlr                       30.100       32.279     +7.24
  Korean won                       1131.600    1207.70     +6.72
  Baht                             33.170        35.80     +7.93
  Peso                             51.170        49.72     -2.83
  Rupiah                           13336.000     13470     +1.00
  Rupee                            64.030        67.92     +6.08
  Yuan                             6.548        6.9467     +6.09
 (Editing by Jacqueline Wong)
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