EM ASIA FX-Slow Fed rate hike outlook lifts Asia FX; oil fuels ringgit

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* Ringgit up near 2 pct; liquidity thin

* Won advances on stop-loss dlr selling, exporters

* Rupiah gains on bond inflows

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By Jongwoo Cheon

, Feb 4 (Reuters) – Most emerging Asian currencies

rallied on Thursday as dumped dollar holdings against

the regional units after a top official

increased expectations of slower U.S. interest rate hikes.

The Malaysian ringgit jumped nearly 2 percent in

thin trading as extended gains on the dollar’s

weakness and expectations of production cuts. That helped

ease concerns over the country’s falling oil and gas revenues.

South ’s won advanced as investors rushed to

cover bearish positions in the second worst-performing Asian

currency so far this year. ’s rupiah rose on

bond inflows.

, President of the Federal Reserve Bank of New

York, said on Wednesday that financial conditions had tightened

considerably in the weeks since the U.S. central bank raised

interest rates. Policy makers would have to take that factor

into consideration should it persist, he said.

Activity in U.S. services sector slowed in January to a near

two-year low, adding to doubts over the pace of future increases

in U.S. borrowing costs. The dollar on

Wednesday hit a three-month low against a six major currencies.

“Asia FX may receive some Chinese New Year respite. Markets

seem to be looking for an excuse to sell USD,” said Christopher

Wong, senior FX analyst for Maybank in Singapore.

“Together with easing… by other major central banks

including the and the ECB, accommodative monetary conditions

globally provide some temporary support for Asia ex-Japan FX.”

The ringgit and the rupiah could lead regional gains because

those currencies are more sensitive to oil prices and a weaker

dollar, Wong added.

Sentiment toward emerging Asian currencies has already

improved in the last two weeks as major central banks affirmed a

loose monetary policy stance, a Reuters poll found.

The Bank of Japan last week adopted minus interest rates,

while the European Central Bank is expected to take provide more

stimulus next month.

Still, traders and analysts, including Maybank’s Wong,

remained cautious ahead of U.S. economic data including non-farm

payrolls () due on Friday and the comments of other top Fed

officials.

Economists polled by Reuters are looking for total non-farm

payrolls to increase by 190,000 in January and the unemployment

rate to remain at a 7-1/2-year low of 5 percent.

“We would need below-consensus U.S. payrolls for the trend

to continue, something closer to 100,000,” said Sean Yokota,

head of Asia strategy for Scandinavian bank SEB in Singapore,

referring to the trend to a weaker dollar and stronger Asian

currencies.

RINGGIT

The ringgit found further support from demand linked to

daily fixing.

Interbank speculators hesitated to add further bullish bets

on the Malaysian currency with caution growing ahead of U.S.

data and liquidity subdued.

“I will buy USD on dips. Tomorrow, we have NFP,” said a

senior Malaysian bank trader in .

WON

The won advanced as local and foreign investors dumped

dollar holdings to limit losses. South Korea’s exporters also

bought the won for settlements.

The South Korean currency pared some of earlier gains as

local importers purchased the dollar for payments on dips.

“We need to open the door for further stop-loss (dollar)

selling, but the dollar has found some support overall now,”

said a South Korean bank trader in Seoul. “The won is unlikely

to extend gains from here.”

RUPIAH

The rupiah gained, tracking higher government bond prices

, which offer one of the highest yields in Asia.

Long-term foreign investors bought the Indonesian currency

in non-deliverable forwards markets, traders said.

The official Jakarta Interbank Spot Dollar Rate,

which the central bank introduced in 2013 to manage exchange

rate fluctuations, was fixed at 13,662, stronger than the

previous 13,757.

CURRENCIES VS U.S. DOLLAR

Change on the day at 0505 GMT

Currency Latest bid Previous day Pct Move

Japan yen 117.87 117.91 +0.03

Sing dlr 1.4151 1.4140 -0.08

dlr 33.377 33.808 +1.29

Korean won 1202.30 1219.30 +1.41

Baht 35.62 35.82 +0.56

Peso 47.75 47.86 +0.24

Rupiah 13675.00 13750.00 +0.55

Rupee 67.85 68.07 +0.34

Ringgit 4.1520 4.2200 +1.64

Yuan 6.5778 6.5764 -0.02

Change so far in 2016

Currency Latest bid End prev year Pct Move

Japan yen 117.87 120.30 +2.06

Sing dlr 1.4151 1.4177 +0.18

Taiwan dlr 33.377 33.066 -0.93

Korean won 1202.30 1172.50 -2.48

Baht 35.62 36.00 +1.07

Peso 47.75 47.06 -1.43

Rupiah 13675.00 13785.00 +0.80

Rupee 67.85 66.15 -2.50

Ringgit 4.1520 4.2935 +3.41

Yuan 6.5778 6.4936 -1.28

(Additional reporting by Yena Park in SEOUL and IFR Markets’

Catherine Tan; Editing by Eric Meijer)

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