Asian forex: South Korean won outperforms other emerging currencies

South Korea's won outperformed other emerging Asian currencies on Thursday against a weaker US dollar, as investors awaited next week's historic summit between US President Donald Trump and North Korean leader Kim Jong Un. The won has been a beneficiary of a perceived thawing of ties between the two countries.
It was also supported by a dollar rendered weaker by multiple European central bankers talking up the possibility of an end to the European Central Bank's (ECB) quantitative easing. The dollar index fell 0.22 percent, with ECB Chief Economist Peter Praet saying the ECB would debate next week whether to end bond purchases later this year.
Further comments by the head of Germany's central bank and his Dutch counterpart added fuel to the fire.
"Note that this round of hawkish ECB comments came at a time when the Fed is in its blackout period," said Terence Wu, an assistant vice president, FX Research & Strategy with OCBC Bank, in a note, referring to the time during which central bankers are not allowed to make comments.
The Federal Reserve is widely expected to raise rates at the end of a two-day meeting on Wednesday, and traders will be looking for clues in its comments on how much more tightening may be on the way this year.
Wu added that the current scenario was reminiscent of 2018's beginning, with the Fed thought to be static on its rate hike path compared to other central banks which are picking up the pace of normalization.
"Recall that this is the foundation of the USD-weakness thesis then. We think the ball is now firmly in the Fed's court."
Among Asian units, the South Korean won was on track to firm for a fifth straight session. Its was followed by a 0.12 percent gain in the Singapore dollar. The Taiwan dollar firmed 0.07 percent.
Malaysia's ringgit marked time a day after Prime Minister Mahathir Mohamad said he had accepted central bank governor Muhammad Ibrahim's resignation, adding that he has not yet decided on a successor.
Moving in the other direction, the Philippine peso weakened 0.04 percent, while Indonesia's rupiah lost 0.11 percent.
The Chinese yuan slipped 0.04 percent, interrupting what would have been a fourth straight winning session. The slip was due to higher corporate demand for dollars and came despite the People's Bank of China strengthening the yuan mid-point for a third consecutive session.
India's rupee weakened 0.22 percent on Thursday, cementing its position as the region's worst performing currency this year, down 4.77 percent.
Reserve Bank of India policymakers unanimously raised interest rates by 0.25 percent to 6.25 percent on Wednesday. Economists polled by Reuters had been roughly split on whether it would choose either June or August as the time to hike the key rate for the first time since 2014.
"It appears that the higher inflation prints were at (or at least near) the top of the policymakers' minds. It is unlikely that this will be a 'one and done' hike, and another hike in the near term may be possible, depending on upcoming inflation prints," wrote OCBC's Wu.
"Despite an official neutral stance, we expect the RBI to adopt a slightly hawkish tilt going forward."
Quickening inflation, largely due to higher oil prices, have weighed heavily on the rupee. India's annual consumer inflation topped the RBI's medium-term 4 percent target for the sixth straight month in April, at 4.58 percent.