The South Korean won strengthened against the dollar on Wednesday, brushing aside US President Donald Trump's statement that the United States may have to "totally destroy" North Korea. Most other emerging Asian currencies were trading mixed while the dollar edged up as traders awaited the outcome of the Federal Reserve's meeting at which the Fed was expected to announce plans to trim its bond holdings.
In a speech to the UN General Assembly, Trump on Tuesday said the US will be forced to destroy North Korea unless Pyongyang backs down from its nuclear challenge, mocking North Korean leader Kim Jong Un as a "rocket man" on a suicide mission.
Tuesday warning follows similar Trump statements, in which he vowed to unleash "fire and fury" if Pyongyang threatened the United States's safety. "We believe it's more about posturing but in reality there seem to be few options to resolve this issue outside of talks. Market behaviour largely reflects that," said Tariq Ali, investment strategist at Standard Chartered Bank.
"Generally, markets are used to these kind of statements coming from both sides and they are not paying too much attention to North Korea at this time and are focused on the Fed meeting," Ali added. The won, which has been pressured of late amid the ongoing political tensions was unswayed by Trump's strong rhetoric and gained as much as 0.4 percent versus the dollar.
China's yuan regained its footing after weakening in the previous session, while Taiwan dollar hit its highest in more than two weeks. The peso rose to its highest in more than a week to trade at 50.80 against the dollar, before paring gains.
The central bank said on Tuesday that the Philippines' balance of payment deficit stood at $1.39 billion as of end-August, narrower than in the same period last year. "I think there have been a lot of inflows lately, and it's been boosting the peso" said Jason Manalac, a trader at Philiippine Bank of Communications"But looks like some corporate demand came in through for dollars and probably that's why it (peso) went back to 50.93," he added.