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Wednesday July 5, 11:07 AM

Emerging Asia FX-Weaker on North Korea missile news

SINGAPORE, July 5 (Reuters) - Asian currencies fell on Wednesday from day-earlier multi-week peaks as news North Korea had launched several missiles increased concerns of geopolitical risks, spooking traders and investors.

The Japanese yen fell against the dollar and hit a record low against the euro, while the South Korean won eased more than a quarter of a percent to near 949 per dollar.

But losses were limited on expectations the Bank of Korea (BOK) could intervene to check a sharp drop in the won.

The Singapore dollar fell slightly, while the Taiwanese dollar and Thai baht shed a quarter of a percent each. Most stocks markets in Asia fell.

South Korea's second vice finance minister in charge of international affairs, Chin Dong-soo, said authorities would take necessary action to stabilise the foreign exchange market if it turned volatile due to the North Korean missile launch.

"Although the political language from the United States and Japan in response to this event has been hawkish so far, we suspect the Korean won impact will be limited by BOK action to support the won if necessary," Shahab Jalinoos, currency strategist with ABN AMRO Bank said.

The United States said it will discuss prospects for hauling North Korea before the United Nations Security Council over its missile firings, a move that could pave the way for U.N. sanctions on North Korea.

Japan said it may consider economic sanctions against North Korea while South Korea's Yonhap news service said the South Korean military had stepped up its alert level.


Traders said early losses in the Asian currencies would be limited because markets would shift their focus to economic data and policy moves by various Asian central banks.

The Bank of Japan is expected to raise overnight interest rates from zero next week, its first such move in 6 years, which could boost sentiment on other Asian currencies.

"There is also the non-farm payrolls data expected from the United States. Also rate setting meetings are expected in South Korea and Indonesia this week and these factors are likely to grab attention," said a foreign exchange trader in Singapore.

"Most currencies are likely to regain ground."

In a morning report, Standard Chartered Bank said the North Korean missile launch would have limited market impact on the yen and the won.

 "With the South Korean authorities saying they will limit
any market volatility and the Bank of Japan meeting on 13-14
July looming, we expect market reaction to be limited barring
any escalation in the situation," Standard Chartered said.
 Change on the day at 0203 GMT
 Currency    Latest bid   Previous day    Pct Move
 Japan yen       115.01         114.56       -0.39
 Sing dlr        1.5824         1.5807       -0.11
 Taiwan dlr      32.345         32.237       -0.33
 Korean won      946.40         943.00       -0.36
 Baht             37.99          37.89       -0.26
 Peso             52.71          52.66       -0.09
 Rupiah         9065.00        9077.00       +0.13
 Rupee            45.99          46.01       +0.04
 Ringgit         3.6420         3.6400       -0.05
 Yuan            7.9964         7.9997       +0.04
 Change so far in 2006
 Currency    Latest bid  End prev year    Pct Move
 Japan yen       115.00         117.96       +2.57
 Sing dlr        1.5826         1.6625       +5.05
 Taiwan dlr      32.345         32.850       +1.56
 Korean won      946.20        1011.60       +6.91
 Baht             37.98          41.11       +8.24
 Peso             52.71          53.09       +0.72
 Rupiah         9067.00        9835.00       +8.47
 Rupee            45.99          45.04       -2.07
 Ringgit         3.6420         3.7790       +3.76
 Yuan            7.9964         8.0702       +0.92


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