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Emerging Asia FX-Baht at six-year peak, won off highs

Written by: Staff

SINGAPORE, Apr 7 (Reuters) The Thai baht rallied to its highest in almost six years on Friday, as hopes of an end to Thailand's political crisis remained high after Thaksin Shinawatra's decision this week to step down as prime minister.

The South Koran won was also riding high, hitting 8-{ year highs versus the dollar and yen, although the currency pared its gains by late Asian trade.

Asia's other currencies were largely steady, as focus turned to a key U.S. jobs report due later on Friday. The numbers could provide the market with fresh direction on how much further the Federal Reserve is likely to lift U.S. interest rates.

Dealers in Bangkok said the baht rose to about 38.10 per dollar, the strongest level since May 2000.

Although Thailand's political outlook remains uncertain, they said Thaksin's decision to step down as prime minister on Wednesday had led to a feeling that political concerns may calm for now.

This boosted the Thai stock market and allowed the baht to rack up gains of 2.0 percent this week.

''The baht is still reacting to the political situation, although questions remain over what will happen next,'' said Jimmy Koh, head of economics and treasury at United Overseas Bank. ''As long as the equity market outperforms, the baht should gain.'' Thailand's key stock index rose on Friday close to Wednesday's high, which was the strongest level in more than two years when foreign investors were net buyers of Thai stocks to the tune of about 0 million.

Markets in Thailand were closed on Thursday for a holiday.

''There is offshore demand for the baht and some of that could be related to the stock market,'' said a Bangkok-based trader.

The seven-month political crisis may be far from over though.

Opposition parties are boycotting by-elections meant to complete last weekend's snap poll and pressing for political reform instead.

Only a full parliament can elect a new prime minister, but parliament must meet within 30 days of the April 2 poll.

WON STRENGTH The won extended gains to reach 948.5 per dollar and about 8.0443 per yen, the highest levels since late 1997.

By late Asia trade, however, the won had pared its gains, following the latest comments by officials on the won's strength.

Korean Finance Minister Han Duck-soo on Friday declined to say whether he planned to intervene to cap the won's current rise, but said the government could take action, if necessary, in a ''surprising manner''.

The Bank of Korea earlier in the day held interest rates steady but Lee Seong-tae, the new central bank governor, pledged to maintain a tightening stance and said the economy would maintain its growth momentum despite high oil prices.

''We see these comments as suggestive that the BOK expects a robust economy despite won strength, a factor that gives the market a green light to continue buying the currency on a fundamental basis,'' Shahab Jalinoos, senior currency strategist at ABN AMRO Bank, said in a note.

Analysts said Asian currencies continued to draw support from expectations that a rise in the Chinese yuan is likely to speed up -- especially with Chinese President Hu Jintao due to visit the United States this month.

''The renminbi is a factor for Asian currencies, even though the dollar/renminbi fixing is higher today,'' said Koh at United Overseas Bank.

CURRENCIES VS U.S. DOLLAR Change on the day at 0800 GMT Currency Latest bid Previous day Pct Move Japan yen 117.61 117.55 -0.05 Sing dlr 1.6059 1.6050 -0.06 Taiwan dlr 32.323 32.329 +0.02 Korean won 953.20 953.50 +0.03 Baht 38.13 38.37 +0.64 Peso 51.10 51.12 +0.04 Rupiah 8995.00 9000.00 +0.06 Rupee 44.66 44.70 +0.09 Ringgit 3.6670 3.6670 +0.00 Yuan 8.0118 8.0082 -0.04 Change so far in 2006 Currency Latest bid End prev year Pct Move Japan yen 117.61 117.96 +0.30 Sing dlr 1.6059 1.6625 +3.52 Taiwan dlr 32.323 32.850 +1.63 Korean won 953.20 1011.60 +6.13 Baht 38.13 41.11 +7.83 Peso 51.10 53.09 +3.89 Rupiah 8995.00 9835.00 +9.34 Rupee 44.66 45.04 +0.85 Ringgit 3.6670 3.7790 +3.05 Yuan 8.0118 8.0702 +0.73 REUTERS CS PM1438

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