* S.Korea c.bank cuts rates in surprise move
* Seoul FX authorities spotted intervening to sell won -
* Thai finmin steps up rate cut pressure; measures ready
* Philippine peso hits 7-week high on inflows from
(Adds text, updates prices)
By Jongwoo Cheon
SINGAPORE, May 9 (Reuters) - An unexpected interest rate cut
from the Bank of Korea sent the won down on Thursday, pulling
away from a 2-month high, while the Thai baht slid as the
government stepped up pressure on the central bank to cut
Foreign exchange authorities in Seoul were also spotted
intervening to sell won, especially in late trade, which pushed
it further down, traders said.
In contrast, the Taiwan dollar rose to the
strongest level in more than three months on exporters' and
foreign financial inflows.
Not to be outdone, the Philippine peso also
notched a seven-week high on inflows from remittances and on
improving sentiment stemming from encouraging global economic
The positive mood had earlier helped the won
advance 0.3 percent to 1,083.0 per dollar, its strongest since
However, it turned down after the BOK cut its base rate
by 25 basis points to 2.50 percent, its lowest
since early 2011, defying market expectations of steady outcome.
The unexpected move came as the government warned of the
won's sharp rise, especially against the yen amid
growing worries that South Korean exporters are losing their
competitive edge to Japanese rivals enjoying a lift from a weak
Earlier, the won strengthened to 10.9383 to the yen, its
strongest since September 2008, and then turned south after the
BOK decision to lose 0.8 percent to 11.0493.
"Exchange rates, especially yen/won, is definitely a factor
in today's BOK decision. I doubt how much small- and
medium-sized enterprises can tolerate a yen/won level below 11,"
said Yuna Park, a currency and bond analyst at Dongbu Securities
"The government and the BOK will not allow further
appreciation in the won. So, I do not expect much gains from
here," said Park, adding that she has revised the year-end
target for the won to 1,080 per dollar from 1,050.
Nonetheless, the won is seen rising further on demand from
bond inflows and buying from exporters on receding geopolitical
tensions on the Korean peninsula, traders and analysts said.
After the rate cut, foreign investors turned net buyers in
Seoul's main stock market.
Sacha Tihanyi, senior currency strategist for Scotiabank,
said in a note that the upside pressure on the won is unlikely
to ease as real rates remain fairly high.
The baht fell as investors continued to reduce
bullish positions in the best performing emerging Asian currency
Thailand Finance Minister Kittirat stepped up pressure on
the central bank to cut interest rates, saying it should take
baht strength into account when setting policy and not just
The government's strong rhetoric pushed government bond
yields down with the five-year falling to 2.87
percent. The 10-year yield also dropped to 3.36
While the finance minister and Bank of Thailand governor
differed on their views about monetary policy, both agreed on
measures to stem the currency.
Kittirat said this week four measures aimed at holding down
the baht had been agreed between the central bank and
government, but he made it clear he felt cutting interest rates
would be simpler and have a more immediate impact.
Some analysts believe a surprise rate cut could not be ruled
"There could be surprises such as a rate cut," said
Saktiandi Supaat, head of FX research for Maybank in Singapore.
If the baht weakens past 29.60 per dollar, it could head to
29.75, he added.
The local currency hit a 16-year high in April and at one
point had risen 7 percent against the dollar since the start of
The Malaysian ringgit earlier hit a 21-month high of 2.9590
per dollar as risk sentiment improved.
But the Malaysian currency turned weaker as investors took
profits on caution over possible intervention by the central
bank around 2.9600.
The ringgit came under further pressure after industrial
production in March fell 0.2 percent from a year earlier,
missing expectations of a 0.7 percent growth.
The Taiwan dollar advanced 0.5 percent to 29.341 to the U.S.
dollar, its strongest since Jan. 28, on inflows from exporters
and offshore funds.
Local exporters bought the island's currency when it fell
below 29.400, traders said.
The central bank was spotted buying the Taiwan dollar below
the 29.500 level and selling when it rose above 29.350 in order
to stabilise the currency, traders said.
Importers bought U.S. dollars for payment below 29.350, they
The Philippine peso rose 0.2 percent to 40.735 per dollar,
its strongest since March 21 on inflows from remittances.
But it gave up much of the earlier gains on dollar demand
from local corporates and caution over possible central bank
"They are still expected towards 40.70 today and more so at
40.55," said a senior Philippine bank trader in Manila,
referring to the possibility of central bank intervention.
CURRENCIES VS U.S. DOLLAR
Change on the day at 0635 GMT
Currency Latest bid Previous day Pct Move
Japan yen 98.71 99.02 +0.31
Sing dlr 1.2283 1.2277 -0.05
Taiwan dlr 29.408 29.500 +0.31
Korean won 1090.90 1086.50 -0.40
Baht 29.46 29.36 -0.34
Peso 40.81 40.84 +0.07
*Rupiah 9728.00 9728.00 +0.00
Rupee 54.24 54.16 -0.14
Ringgit 2.9690 2.9625 -0.22
Yuan 6.1339 6.1410 +0.12
Change so far in 2013
Currency Latest bid End prev year Pct Move
Japan yen 98.71 86.79 -12.08
Sing dlr 1.2283 1.2219 -0.52
Taiwan dlr 29.408 29.136 -0.92
Korean won 1090.90 1070.60 -1.86
Baht 29.46 30.61 +3.90
Peso 40.81 41.05 +0.60
Rupiah 9728.00 9630.00 -1.01
Rupee 54.24 54.99 +1.39
Ringgit 2.9690 3.0580 +3.00
Yuan 6.1339 6.2303 +1.57
* Financial markets in Indonesia are closed for a holiday.
(Additional reporting by Roger Tung in TAIPEI; Editing by Shri