Rate cut shock hits won

The South Korean won led declines in emerging Asian currencies on Thursday after the central bank surprised markets with its first rate cut in over three years, while other regional units fell as a drop in Australian employment added to global growth worries.
Sentiment towards riskier assets such as emerging Asian currencies had already soured after minutes from the Federal Reserve's June meeting on Wednesday showed more monetary easing was not on the cards for now.
The won ended local trade down 0.9 percent, its largest daily percentage fall since May 16, at 1,151.5.
Technically, the currency is seen as having room to weaken further to 1,153-1,155. Around that level, it has the 38.2 percent retracement of strengthening between late May and early July, as well as a 55-day moving average.
The Bank of Korea finally joined a global rush to ease monetary policy, cutting its benchmark rate 25 basis points to help fend off the impact of the global economic slowdown.
"This cut may not be the beginning of a sustained rate cut (cycle) but it will be the beginning of a dovish view of rates by BOK (Bank of Korea)," said Suresh Kumar Ramanathan, head of regional interest rate and FX strategy at CIMB Investment Bank in Kuala Lumpur.
One-year South Korean interest rate swaps (IRS) plummeted 30 basis points (bps), while one-year basis spread against one-year cross-currency swap rates narrowed to 127 bps, the lowest since October 2007.
"It will support equities and help bring foreign portfolio buying interest back into the country," said Sacha Tihanyi, senior currency strategist for Scotiabank in Hong Kong. The Singapore dollar slid against the greenback after the weaker Australia jobs data. The currency also fell against the Malaysian ringgit as investors took profits. On Wednesday, the Singapore dollar hit a 14-year high versus the ringgit.
The Indonesian rupiah fell 0.5 percent against the dollar on selling from local and foreign banks.
The central bank was spotted buying the rupiah through state-run banks to limit its downside, dealers said. Currency players were unfazed by Bank Indonesia's decision to hold its benchmark interest rate at 5.75 percent, which was widely expected.