Inflows support Asian currencies on Fed, China optimism

By Jongwoo Cheon

SINGAPORE (Reuters) - Capital inflows on Tuesday lifted most emerging Asian currencies on sustained expectations that the U.S. Federal Reserve may keep its stimulus and as China's reform plans bolstered risk appetite.

The South Korean won rose on demand from offshore funds, hitting its strongest against the dollar since October 24 when it touched this year's high.

The Taiwan dollar advanced on foreign financial inflows. Bond inflows supported the Indonesian rupiah.

Investors were awaiting Fed Chairman Ben Bernanke's speech on "Communication and Monetary Policy" later in the day and minutes of the U.S. central bank's October 29-30 meeting on Wednesday.

On Monday, top Fed officials provided some clues on U.S. monetary policy.

Charles Plosser, president of the Philadelphia Fed, said improved economic and labour market conditions suggest the Fed should set a fixed dollar amount on its current bond-buying programme and end it when that amount is reached.

William Dudley, the president of the New York Fed, said he was becoming "more hopeful" about the U.S. economy.

WON

The won hovered nears this year's high of 1,054.3 against the dollar on demand from offshore funds and as foreign investors bought Seoul shares .

Caution grew over possible intervention by the foreign exchange authorities to stem the won's strength. South Korean importers bought the dollar on dips.

"The current market force implies further appreciation in the won," said a senior foreign bank trader in Seoul.

"Only strong intervention could limit its upside."

TAIWAN DOLLAR

The Taiwan dollar advanced on inflows from foreign financial institutions with higher local stocks <.TWII>.

Traders, however, hesitated to push the island's currency firmer from the current level, saying the won's break of 2013 high to the greenback may fuel the gain in the Taiwan dollar.

Exporters' demand for month-end settlements was seen, but their bids were not strong with wary of possible intervention by the central bank.

Importers placed bids for the U.S. dollar for payments around 29.400-29.450.

RUPIAH

The rupiah gained on foreign banks' bids before Indonesia's bond sale later in the day when the government aims to raise 8 trillion rupiah, traders said.

The Jakarta Interbank Spot Dollar Rate (JISDOR) was fixed at 11,609, compared with the previous 11,627.

The rupiah's one-month non deliverable forwards (NDFs) also advanced.

Still, month-end dollar demand from local companies including importers limited the rupiah's upside in the domestic market, traders said.

"The rupiah might strengthen on NDFs and with a support at 11,650-700," said a Jakarta-based trader, referring to the rupiah's value to the dollar.

"But importers dollar demand might cap the strength."

CURRENCIES VS U.S. DOLLAR

Change on the day at 0450 GMT

Currency Latest bid Previous day Pct Move

Japan yen 99.82 100.00 +0.18

Sing dlr 1.2462 1.2461 -0.01

Taiwan dlr 29.472 29.580 +0.37

Korean won 1055.30 1057.90 +0.25

Baht 31.56 31.57 +0.02

Peso 43.57 43.57 +0.00

Rupiah 11605.00 11630.00 +0.22

Rupee 62.31 62.41 +0.16

Ringgit 3.1860 3.1895 +0.11

Yuan 6.0915 6.0920 +0.01

Change so far in 2013

Currency Latest bid End prev year Pct Move

Japan yen 99.82 86.79 -13.05

Sing dlr 1.2462 1.2219 -1.95

Taiwan dlr 29.472 29.136 -1.14

Korean won 1055.30 1070.60 +1.45

Baht 31.56 30.61 -3.01

Peso 43.57 41.05 -5.78

Rupiah 11605.00 9630.00 -17.02

Rupee 62.31 54.99 -11.75

Ringgit 3.1860 3.0580 -4.02

Yuan 6.0915 6.2303 +2.28

(Additional reporting by Lin Miao-jung in Taipei and Rieka Rahadiana in Jakarta; Editing by Anand Basu)