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EM ASIA FX-Won eases before meeting; Ukraine caution weighs on Asia FX
August 13, 2014 / 5:38 AM / 3 years ago

EM ASIA FX-Won eases before meeting; Ukraine caution weighs on Asia FX

* S.Korea expected to cut base rate by 25 bps
    * Baht gains on catch-up plays, stop-loss dlr selling

 (Adds text, updates prices)
    By Jongwoo Cheon
    SINGAPORE, Aug 13 (Reuters) - The South Korean won eased on
Wednesday in subdued trading a day before the central bank's
monetary policy meeting and most other emerging Asian currencies
dipped amid caution over the Russia/Ukraine crisis. 
    The Thai baht, however, rose on catch-up plays as
local financial markets were closed on Monday and Tuesday when
most emerging Asian currencies gained.
    The Bank of Korea is expected to cut its policy interest
rate by 25 basis points to 2.25 percent on Thursday
to align monetary policy with the government's new stimulus
    If the central bank just meets the expectations, and no
more, the won is unlikely to weaken much further as a
small cut is already priced in to the won to some degree,
traders and analysts said.
    "The won's performance suggests that market is not expecting
the rate cut to be the start of an easing cycle," said Andy Ji,
Asian currency strategist for Commonwealth Bank of Australia in
    "In the medium-term, we see robust bond inflows which should
keep the dollar/won heavy in its 1,020-40 range post BOK." 
    The won eased 0.1 percent to 1,027.8 per dollar as of 0440
    On Aug 8, the South Korean currency had fallen to as weak as
1,041.3, its weakest since April 25.
    Some traders expected the won to rebound if the central bank
cuts the policy rate, saying some offshore funds are likely to
cover short positions they had built up on rate cut
    "Some large funds still looked like stubbornly holding on to
 short positions even though many small ones appear to have
cleared them on the won's recent rebound," said a foreign bank
trader in Singapore, declining to name the funds.
    Still, investors were waiting to see if Bank of Korea
Governor Lee Ju-yeol takes a dovish stance on future policies.
    The foreign exchange authorities are unlikely to allow the
won's continued strength and would protect exporters' foreign
earnings as the government is trying to prop up growth, traders
    "I'd like to buy the won, but after tomorrow," said one
foreign bank trader. 
    The peso fell, tracking its weakness in
non-deliverable forwards.
    The Philippine currency also eased on expected corporate
dollar demand.
    The baht advanced on stop-loss dollar selling by foreign and
local investors.
    Bangkok shares rose more than 1 percent, well
outperforming regional equity markets.
    The Taiwan dollar traded firmer, which traders said
the central bank weakened with its usual last-minute
    Local exporters bought the island's currency for
settlements, but they were not active on expectations of further
strength in the U.S. dollar.
    Foreign financial institutions bought the greenback,
probably for repatriation of dividends, traders said.
    Change on the day at 0440 GMT
  Currency    Latest bid   Previous day    Pct Move
  Japan yen       102.27         102.26       -0.01
  Sing dlr        1.2500         1.2506       +0.05
  Taiwan dlr      30.001         30.060       +0.20
  Korean won     1027.80        1026.40       -0.14
  Baht             31.97          32.14       +0.52
  Peso             43.97          43.84       -0.28
  Rupiah        11688.00       11685.00       -0.03
  Rupee            61.25          61.08       -0.28
  Ringgit         3.1890         3.1943       +0.17
  Yuan            6.1599         6.1583       -0.03
  Change so far in 2014
  Currency    Latest bid  End prev year    Pct Move
  Japan yen       102.27         105.28       +2.94
  Sing dlr        1.2500         1.2632       +1.06
  Taiwan dlr      30.001         29.950       -0.17
  Korean won     1027.80        1055.40       +2.69
  Baht             31.97          32.86       +2.78
  Peso             43.97          44.40       +0.98
  Rupiah        11688.00       12160.00       +4.04
  Rupee            61.25          61.80       +0.90
  Ringgit         3.1890         3.2755       +2.71
  Yuan            6.1599         6.0539       -1.72
 (Additional reporting by Jeanny Kao in TAIPEI and Satawasin
Staporncharnchai in BANGKOK; Editing by Eric Meijer)

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