October 31, 2019 / 7:05 AM / 21 days ago

EM ASIA FX-S.Korean won leads Asia FX higher after Fed rate cut

    * South Korean won firms to near 4-mth high
    * Room for South Korean cenbank to cut rates - official
    * Yuan set for its strongest month since January

 (Adds text, updates prices)
    By Niyati Shetty
    Oct 31 (Reuters) - Asian currencies strengthened against the
dollar on Thursday, with South Korea's won leading the pack,
after the U.S. Federal Reserve cut interest rates for a third
time this year. 
    The dollar weakened against a basket of major
currencies after the U.S. central bank lowered its policy rate
by 25 basis to sustain growth in the world's largest economy,
but signalled a potential pause in the easing cycle.

   "Lower Fed rates make it easier for Asian central banks to
follow suit and prop up domestic economies here," ING said in a
note. 
    Adding that while the signalled "pause" could be viewed as a
negative sign, Wednesday's Fed cut might not be the last this
cycle as rising global risks could hurt the country's growth
prospects.
    The won, Asia's worst performing currency so far
this year, rose by up to 0.7% to its strongest in nearly four
months. The currency was set to record its best month since
June. 
    Earlier in the day, Bank of Korea's senior deputy governor
said the latest policy decision and comments by the Fed means
there is room for the South Korean central bank to cut its
policy interest rate if needed.
    Market sentiment is in favour of risk taking and the Korean
won is performing well since it is always seen as the currency
that captures the mood in Asian forex markets, said Irene
Cheung, senior strategist for Asia at ANZ Banking Group
(Singapore).             
    The Taiwan dollar and the Philippine peso
each added 0.2%.  
    The Singapore dollar, Thai baht, Malaysian
ringgit and Indian rupee were marginally
stronger. 
    
    YUAN FIRMS DESPITE WEAK DATA
    The yuan added as much as 0.3% to its strongest
in more than 2 months, propped up by a weaker greenback.
    However, gains were tempered as official data showed factory
activity in China shrank for the sixth straight month in October
and by more than expected, pointing to further pressure on the
country's manufacturers from a trade war with the United States.

    China's central bank on Thursday also skipped its targeted
medium-term lending facility operations for the first time since
their debut in January, prompting some market concern that
Beijing may have become less aggressive about monetary easing.
    The currency was on track to record its best month since
January. 
        
    The following table shows rates for Asian currencies against
the dollar at 0632 GMT.
    
    CURRENCIES VS U.S. DOLLAR
 Currency               Latest bid  Previous day  Pct Move
 Japan yen              108.680     108.83        +0.14
 Sing dlr               1.360       1.3616        +0.10
 Taiwan dlr             30.475      30.533        +0.19
 Korean won             1163.400    1168.1        +0.40
 Baht                   30.180      30.22         +0.13
 Peso                   50.740      50.86         +0.24
 Rupiah                 14013.000   14022         +0.06
 Rupee                  70.798      70.88         +0.12
 Ringgit                4.175       4.1785        +0.08
 Yuan                   7.042       7.0560        +0.20
                                                  
 Change so far in 2019                            
 Currency               Latest bid  End 2018      Pct Move
 Japan yen              108.680     109.56        +0.81
 Sing dlr               1.360       1.3627        +0.18
 Taiwan dlr             30.475      30.733        +0.85
 Korean won             1163.400    1115.70       -4.10
 Baht                   30.180      32.55         +7.85
 Peso                   50.740      52.47         +3.41
 Rupiah                 14013.000   14375         +2.58
 Rupee                  70.798      69.77         -1.45
 Ringgit                4.175       4.1300        -1.08
 Yuan                   7.042       6.8730        -2.40
 
 (Reporting by Niyati Shetty in Bengaluru
Editing by Jacqueline Wong)
  
 
 
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