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EM ASIA FX-Won hits 6-month low after weak data, leads drop in Asian currencies
October 1, 2014 / 6:23 AM / 3 years ago

EM ASIA FX-Won hits 6-month low after weak data, leads drop in Asian currencies

(Updates prices, adds comments)
    * Won hits 6-month low as data cements rate cut view
    * Other Asian currencies steady to slightly lower

    By Masayuki Kitano
    SINGAPORE, Oct 1 (Reuters) - The South Korean won slumped to
a six-month low versus the dollar and lagged regional peers on
Wednesday after economic data bolstered expectations for the
Bank of Korea to cut interest rates this month.
    Elsewhere, emerging Asian currencies were generally steady
to slightly weaker, having retreated broadly in September as
investors positioned for an eventual rise in U.S. interest
    The won fell after data showed that South Korean inflation
hit a 7-month low last month and manufacturers reported a
decline in export orders, backing expectations that the Bank of
Korea could ease monetary policy when it meets on Oct. 15.
    The won fell to a low of 1064.5 against the dollar,
 its weakest level since late March. It last traded at
1063.2, down about 0.8 percent on the day.
    Other Asian currencies either held steady versus the dollar
or were slightly weaker, with the Philippine peso slipping 0.2
percent, while the Thai baht and the
Indonesian rupiah both eased 0.1 percent.
    Emerging Asian currencies have been under pressure recently
as investors positioned for the possibility that the U.S.
Federal Reserve could raise borrowing costs faster than expected
once it starts tightening rates, which many investors expect
will begin in the second quarter of 2015.
    An increase in U.S. borrowing costs and rises in U.S. bond
yields can dampen the appeal of higher-yielding currencies and
    The South Korean won could remain under pressure due to
factors such as divergence in the monetary policies of the Bank
of Korea and the U.S. Federal Reserve, Irene Cheung, Asia FX
strategist for ANZ in Singapore, said in a research note issued
on Tuesday.
    Although South Korea's current account balance has remained
strong, there is a growing risk of a reversal in capital flows,
with foreign investors having turned into net sellers of South
Korean stocks in September, Cheung said.
    Foreign investors sold a net 817.4 billion won ($769.0
million) in South Korean equities in September. 
    "Foreigners could have also turned into net sellers of KRW
bonds after a sustained slowdown in buying," Cheung said.
    Cheung said that a possible target level for the won on
three-month non-deliverable forwards (NDFs) is 1,095
, which would be a re-test of this year's low set
in February. The won's three-month NDF last stood at 1,066.20. 
    The rupiah eased 0.1 percent to 12,195 versus the dollar
    The rupiah slipped to an intraday low of 12,200 from around
12,180, after data showed that Indonesia unexpectedly booked a
trade deficit of $318 million in August. The median forecast in
a Reuters poll was for a trade surplus of $170 million.
  Change on the day at   0542 GMT                       
  Currency    Latest bid   Previous day    Pct Move
  Japan yen       109.86         109.60       -0.24
  Sing dlr        1.2757         1.2760       +0.02
  Taiwan dlr      30.477         30.436       -0.13
  Korean won     1063.20        1055.20       -0.75
  Baht             32.45          32.42       -0.08
  Peso             44.96          44.88       -0.19
  Rupiah        12195.00       12180.00       -0.12
  Rupee            61.80          61.77       -0.05
  Ringgit         3.2815         3.2805       -0.03
  Yuan            6.1395         6.1395       +0.00
  Change so far in 2014                                 
  Currency    Latest bid  End prev year    Pct Move
  Japan yen       109.86         105.28       -4.17
  Sing dlr        1.2757         1.2632       -0.98
  Taiwan dlr      30.477         29.950       -1.73
  Korean won     1063.20        1055.40       -0.73
  Baht             32.45          32.86       +1.28
  Peso             44.96          44.40       -1.26
  Rupiah        12195.00       12160.00       -0.29
  Rupee            61.80          61.80       -0.00
  Ringgit         3.2815         3.2755       -0.18
  Yuan            6.1395         6.0539       -1.39
 (1 US dollar = 1,062.9000 Korean won) 

 (Additional reporting by IFR Markets' Catherine Tan)

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