* S.Korea c.bank sees case for easing; bond outflows hit won
* S.Korea president vows more actions on North
* Yuan pares Monday’s gain on softer PBOC fixing
* Rupiah turns weaker after 4-mth high; bond sale eyed
(Adds text, updates prices)
By Jongwoo Cheon
SINGAPORE, Feb 16 (Reuters) – South Korea’s won fell to near
a 5-1/2-year low on Tuesday, leading losses among emerging Asian
currencies, on expectations of a central bank rate cut and
growing tensions with the North.
Most regional currencies also eased on the dollar’s
broad strength.
The Chinese yuan eased as the central bank set
its daily guidance weaker a day after the renminbi’s jump.
The Malaysian ringgit and the Singapore dollar
followed it.
The won lost as much as 0.9 percent to 1,219.4
per dollar, nearing its low of 1,221.1 on Feb. 3, the weakest
since July 2010.
The currency recovered some losses on caution that foreign
exchange authorities may intervene around the 1,220 level to
stem further weakness in the worst-performing Asian currency so
far this year.
“The won is likely to weaken further, given geopolitical
tensions and rate cut calls,” said Yuna Park, currency and bond
analyst at Dongbu Securities in Seoul.
“Theoretically, rate cut views could attract bond inflows
for capital gains, but a weaker won cut chances of arbitrage
trading,” Park said. A low bond yields lifts bond prices.
South Korea’s central bank governor acknowledged the
softening economy may warrant policy easing soon but declined to
signal any immediate action after leaving interest rates
unchanged earlier in the day.
Still, analysts said Asia’s fourth-largest economy would
show further signs of weakening in coming weeks, pressuring the
Bank of Korea to cut the policy rate as soon as at its March 10
meeting.
Major foreign banks continued to buy dollars against the
won, which appeared to be related with bond outflows, currency
traders said.
Offshore funds accelerated selling the won after South
Korean President Park Geun-hye pledged further “strong” measures
against North Korea. That came after the South suspended
operations at a jointly run industrial park as punishment for
the North’s recent long-range rocket launch and nuclear test.
RUPIAH
Indonesia’s rupiah turned weaker after hitting a
four-month high as investors were awaiting the result of the
government’s bond sale later in the day.
The finance ministry aims to raise 12 trillion rupiah
($ 896.9 million) through the auction, while the ministry said it
won’t take more than 18 trillion rupiah. Most of government bond
prices already advanced.
The rupiah opened up 0.6 percent at 13,290 per dollar, its
strongest since Oct. 15.
It reversed the direction on dollar demand from importers
and as traders cut some of bullish bets ahead of the central
bank’s monetary policy meeting on Thursday.
Bank Indonesia is expected to cut its benchmark reference
rate for the second time this year in a bid to lift economic
growth, a Reuters poll showed.
The official Jakarta Interbank Spot Dollar Rate,
which the central bank introduced in 2013 to manage exchange
rate fluctuations, was fixed at 13,333, stronger than the
previous 13,476.
The rupiah has been benefiting as Indonesia provides one of
the highest yields in Asia. Loosening monetary policies by major
central bank helped investors seek those returns.
European Central Bank President Mario Draghi said on Monday
the central bank was ready to ease policy further in March,
highlighting risks from financial market volatility, a global
slowdown in growth, and low oil prices.
CURRENCIES VS U.S. DOLLAR
Change on the day at 0515 GMT
Currency Latest bid Previous day Pct Move
Japan yen 114.74 114.62 -0.10
Sing dlr 1.4039 1.3991 -0.34
Taiwan dlr 33.100 33.421 +0.97
Korean won 1218.40 1208.10 -0.85
Baht 35.66 35.63 -0.07
Peso 47.53 47.45 -0.17
Rupiah 13380.00 13370.00 -0.07
Rupee 68.30 68.07 -0.34
Ringgit 4.1520 4.1295 -0.54
Yuan 6.5140 6.4940 -0.31
Change so far in 2016
Currency Latest bid End prev year Pct Move
Japan yen 114.74 120.30 +4.85
Sing dlr 1.4039 1.4177 +0.98
Taiwan dlr 33.100 33.066 -0.10
Korean won 1218.40 1172.50 -3.77
Baht 35.66 36.00 +0.96
Peso 47.53 47.06 -0.99
Rupiah 13380.00 13785.00 +3.03
Rupee 68.30 66.15 -3.15
Ringgit 4.1520 4.2935 +3.41
Yuan 6.5140 6.4936 -0.31
(Additional reporting by Yena Park in SEOUL and Gayatri Suroyo
in JAKARTA; Editing by Kim Coghill)
