Asian currencies: won dips, Singapore dollar shrugs off output data

The South Korean won fell sharply on Tuesday amid growing tensions after North Korea's nuclear test, leading the weakness in Asian currencies with sentiment undermined by China's bid to weaken the yuan. The US dollar rose from a five-month low against a basket of major currencies ahead of the US Treasury auctions. While China's central bank surprised the market by setting the yuan's daily mid-point sharply lower.
WON The won slid more than 1 percent to 1,264.9 per dollar as growing security tensions on the peninsula persuaded investors to pull out from the Seoul stock market. South Korea announced on Tuesday it was joining a US-led initiative aimed at intercepting shipments suspected of carrying equipment for weapons of mass destruction, a day after North Korea said it conducted a nuclear test.
"It seems that political risks have changed the market's bearish view on dollar/won," said a Singapore-based trader. Analysts at Societe Generale suggested investors should close or tighten stops on their positions betting on the rise of South Korean won against the Singapore dollar.
"Long won/Singapore dollar has been one of our favoured trades but caution should be uppermost with current nervousness regarding North Korea," the analysts said in a note. The won has gained almost 15 percent against the Singapore dollar since early March.
PESO The Philippine peso lost half of a percent to 47.39 per dollar amid concerns about the country's worsening fiscal position. "Dollar/peso went higher on several factors - starting off with an upward revision of government budget deficit target and North Korea's test," said a Manila-based dealer.
The government said on Monday said it may have to raise its 2009 budget deficit target for the third time during the economic downturn. One-month dollar/peso NDFs edged up to 47.66, implying a 0.7 percent peso fall from the spot compared to 0.9 percent on Monday.
SINGAPORE DOLLAR The Singapore dollar was shackled between 1.4443 and 1.4503 per US dollar and barely moved after official data showed the country's factory output rose 24.7 percent in April from March on a seasonally adjusted basis.
Analysts cautioned against reading too much into the volatile data. The currency was capped by fears of possible intervention, with some traders suggesting the authority was buying US dollars at 1.4480 to limit the Singapore dollar's gains. The central bank eased monetary policy in April by lowering the centre of the currency's trade-weighted band.