SINGAPORE: South Korea pushed down the won on Thursday with warnings and official intervention, capping gains among emerging Asian currencies despite new signs of recovery in China and the United States, as well as hopes of an aid deal for Greece.
Initially, the won hit a 14-month high against the dollar and a 16-month peak versus the yen, but quickly turned weaker as Deputy Finance Minister Choi Jong-ku said the country was ready to stem the currency's strength, by measures such as lowering the ceilings on banks' foreign exchange derivatives positions.
In addition, South Korea's foreign exchange authorities were estimated to have bought close to $1 billion to weaken the won, dealers said.
The official comments and intervention follow the won's recent appreciation - rising faster than other Asian currencies and leaping against the yen, eroding the price competitiveness of domestic exporters in overseas markets.
The local unit has risen nearly 10 percent against the Japanese currency since September, according to Thomson Reuters data. During the period, shares in Hyundai Motor Co have lost about 13 percent while Toyota Motor Corp has leaped nearly 14 percent.
"Korean authorities hastened due to a weaker yen and because the won's appreciation was greater than others. They appeared to defend the 1,080 level (to the dollar)," said Yuna Park, a currency and bond analyst at Dongbu Securities in Seoul.
"I don't expect other Asian central banks to follow Korea's tougher stance yet. But if the yen keeps falling while other Asian currencies continue to rise next year, it is possible to see their stances getting tougher too," Park added.
The central banks of Asian countries such as the Philippines, Singapore and Taiwan have been spotted buying US dollars to stem their currencies' gains.
Emerging Asian currencies have been major beneficiaries of policy easing by major central banks, which spurred investors to seek the higher yields with stronger fundamentals available in some emerging economies.
Recently, regional units have risen versus the yen with the Singapore dollar hitting 19-month high to the Japanese unit on expectations of the Bank of Japan's implementing further stimulus.
Japan's main opposition party continued to call for bold monetary expansion by the Bank of Japan, pushing down the yen across the board.
Emerging Asian currencies are likely to stay firm as the United States and China - the world's top two economies and Asia's major export markets - showed more signs of recovery.
China's vast manufacturing sector saw actitivty accelerate in November for the first time in 13 months, preliminary results from a factory survey showed, a sign that the pace of economic growth has revived after seven consecutive quarters of slowdown.
US manufacturing grew in November at its quickest pace in five months, with a rise in domestic demand hinting that factories could provide a boost to economic growth in the fourth quarter
Hopes also increased for an agreement to extend aid to Greece after German Chancellor Angela Merkel said a deal was still possible next Monday when European finance ministers meet again.
WON
The won weakened not only on the deputy finance minister's warnings but also actual dollar purchases by the foreign exchange authorities.
Earlier, the South Korean currency hit 1,080.2 to the dollar, its strongest since Sept. 9, 2011. It also touched 13.0763 versus the yen, its peak since July 8 last year.
"The authorities definitely put on the strong brake against the won's unobstructed appreciation," said a South Korean bank dealer in Seoul.
But investors saw the won staying firm although the authorities will keep attempting to slow it down.
"The market will take a pause, given the authorities' strong determination. But I don't think the trend has been reversed yet as many are still lined up to buy the won," said another dealer in Seoul.
TAIWAN DOOLAR
The Taiwan dollar advanced on inflows from foreign financial institutions in subdued trading.
Interbank speculators hesitated to make big bets before the US Thanksgiving holiday, dealers said.
Investors were cautious over possible intervention by the island's central bank to prevent the Taiwan dollar from strengthening past 29.100 to the greenback, they added.
PHILIPPINE PESO
The Philippine peso gained on remittance inflows and as interbank speculators bought the currency after the strong China manufacturing survey.
Investors stayed wary of potential dollar-buying intervention by the central bank, but the peso is seen staying firm, dealers said.
"Unless onshore swap points collapse here, people would prefer to sell dollars in any uptick," said a foreign bank dealer in Manila.
Short-term peso forwards were not quoted at a discount yet.
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