Won outperforms Asian forex

The South Korean won led gains among emerging Asian currencies on Thursday, boosted by the central bank's surprise hold of the country's benchmark rate, though some gains were later pared as foreigners sold bond futures. The Bank of Korea's monetary policy committee kept its base rate steady at 2.75 percent, resisting pressure from the new government for a cut and signalling that it was not ready to reduce rates any time soon.
The central bank had been expected to slash the rate by 25 basis points, according to a Reuters poll. The decision to hold helped the won extend gains to as much as 0.9 percent to 1,125.1 per dollar. But the South Korean unit shed some of its advance to end local trade at 1,129.1 as foreign investors dumped a net 2.4 trillion Korean won ($2.11 billion) in treasury bond futures . That is the largest daily selling since October 2009, according to the Korea Exchange.
Sustained worries about geopolitical tension with the North Korea also limited the won's upside, traders said. "Despite such massive selling (of bond futures), I wonder if it results in actual outflows. We may see some bond inflows amid tremendous global yen carry trades as the won's level looks attractive," said Jeong My-young, Samsung Futures research head in Seoul, referring to investment in higher-yielding assets using a cheap yen.
Against the yen, the won rose as much as 0.7 percent to 11.2946, near a March high of 11.2795, its strongest since October 2008. On Wednesday, Bank of Japan Governor Haruhiko Kuroda signalled his readiness to offer further stimulus or maintain an ultra-easy policy beyond two years if meeting the bank's 2-percent inflation target proves difficult.
The BoJ's stance has already prompted investors to buy assets in Southeast Asian countries such as Thailand to seek higher returns, traders and analysts said. Global risk appetites were enhanced on Thursday, lifting some emerging Asian currencies such as the Taiwan dollar as fresh data pointed to a recovery in China while Wall Street closed at a record.
Chinese banks made 1.06 trillion yuan ($171.14 billion) of new local currency loans in March, adding to evidence of an economic recovery being fuelled by ample credit. The data followed Thursday's trade figures, which signalled a recovery in domestic demand. The Singapore dollar edged higher as investors awaited announcement of the central bank's monetary policy on Friday.
The Monetary Authority of Singapore is expected to keep the current appreciation path for the Singapore dollar as it prioritises containing inflation over trying to boost growth, according to a Reuters poll. But some economists said there are some risks of easing as the economy is barely growing.
The Singapore dollar is expected to slide if the central bank eases policy as the currency has not priced such a possibility, traders and analysts said. The Indonesian rupiah turned weaker after the central bank saw continuing depreciation pressure on the currency and trimmed its 2013 economic growth forecast.