Emerging FX-Asia rallies, won in spotlight

SINGAPORE, Nov 23 (Reuters) Asian currencies rallied on Thursday, with the Singapore dollar hovering near nine-year highs and the Philippine peso touching a 4-1/2-year peak, in reaction to a broad sell-off in the US currency overnight.

The South Korean won was also in focus as authorities continued to warn against the currency's strength and the central bank said it would boost reserve requirements on short-term deposits in a move aimed at cooling the housing market.

Overall trade was subdued with US and Japanese markets closed for a holiday.

But with the dollar taking a beating overnight as investors adjusted positions ahead of the break, Asia's currency markets opened on a firm footing.

''It is a response to what happened overnight to the dollar, so most Asian currencies are continuing to appreciate,'' said Christy Tan, a currency strategist at Bank of America.

The Philippine peso rose to 44.66 to the dollar, its highest level in about 4-{ years, while the Singapore dollar held close to a nine-year overnight high of about 1.5520 per US dollar.

The Japanese yen was at 116.64 per dollar, up 0.7 per cent from late Wednesday's levels in Asia, and the South Korean won added almost 0.5 per cent to about 929.50 per dollar -- its highest in just over 1-{ weeks.

The chief foreign exchange official at South Korea's central bank warned on Thursday it would take steps whenever necessary to stabilise the currency market, adding the won had overshot its fair value.

''It is more a case of the authorities wanting not only just to stem won strength because of concerns about exporters but also because it is starting to detect that speculative flows are behind won gains,'' said Tan.

''Although dollar/won is still above the lows hit earlier this month, on a NEER (nominal effective exchange rate) basis, the won is at record highs and this is a worry in terms of export competitiveness.'' In Singapore, there was also wariness about central bank intervention to curb strength in the local currency and dealers said the Singapore dollar was probably trading on the strong side of its secret trade-weighted currency band.

''There is no sign so far of the MAS (Monetary Authority of Singapore), but definitely the market will be cautious at this level,'' said one trader.

Elsewhere, the Taiwan dollar climbed almost 0.25 per cent to about 32.73 per U.S. dollar, its highest since Nov.

13, while the Chinese yuan rose to 7.8575 per dollar, its strongest since its July 2005 revaluation.

REUTERS AKJ VA RAI0918