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Korean won leads Asian currencies lower as ringgit drops on oil

Thursday, October 27, 2016 - 10:18

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South Korea's won led declines in emerging Asian currencies as falling crude-oil prices curbed demand for higher-yielding assets and US data supported the case for the Federal Reserve to increase interest rates.

[SEOUL] South Korea's won led declines in emerging Asian currencies as falling crude-oil prices curbed demand for higher-yielding assets and US data supported the case for the Federal Reserve to increase interest rates.

Malaysia's ringgit fell for a second day as Brent crude hovered below US$50 per barrel after declining 3.5 per cent over the last three sessions. The Bloomberg Dollar Spot Index stayed close to its strongest level in seven months, having gained ground over the past week amid mounting odds of the Fed tightening policy this year.

A gauge of US service industries and growth in September new home sales beat analyst estimates, reports showed Wednesday.

"US housing sales and PMI are really supportive for the dollar," said Stephen Innes, a senior trader at Oanda Asia Pacific Pte in Singapore.

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"We're almost 75 per cent priced in for the Fed rate hike, so further dollar traction based on Fed rate hike expectations is quite limited."

The won fell 0.4 per cent to 1,138.75 per US dollar as of 9:49am in Hong Kong. The ringgit declined 0.4 per cent 4.1805 versus the greenback. The MSCI Emerging Markets Currency Index retreated 0.3 per cent, while a gauge of developing-nation stocks index dropped 0.4 per cent.

"Weakness in oil will also hurt sentiment toward emerging-market currencies," said Min Gyeong Won, a Seoul-based currency analyst at NH Futures Co in a note on Thursday. He predicts the won will trade in a range of 1,135 to 1,145 per US dollar Thursday.

South Korea's 10-year bonds fell, with the yield rising two basis points to 1.65 per cent. The three-year note yield was little changed at 1.41 per cent.

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