By Jongwoo Cheon
SEOUL (Reuters) - South Korea's won hit its strongest level in more than five years against the yen on Monday, ending the year up, but most emerging Asian currencies suffered losses to the dollar with the U.S. Federal Reserve to start tapering its stimulus in January.
The won rose as much as 0.2 percent to 9.9983 to the Japanese currency, breaking through a psychological resistance at 10.000 for the first time since September 2008.
South Korea is concerned about the pace of the yen's rapid depreciation against the won, the country's deputy finance minister said, in the latest warning about the cross rate. The won stood at 10.0171 to the Japanese currency as of 0437 GMT.
Despite such warning and possible intervention by the foreign exchange authorities, the won is expected to rise more to the yen, traders and analysts said.
"The won is eventually clear 10 to the yen. The trend may not be changed even though the authorities will be able to slow the pace," said Yuna Park, a currency and bond analyst at Dongbu Securities in Seoul.
"The authorities will defend that level, given its economic impact. Once Japanese companies cut prices on a weaker yen, the Korean economy will be hit significantly," Park added.
The won is seen heading to 9.552 to the yen, the 76.4 percent Fibonacci retracement of its 2007-2009 depreciation, if the South Korean unit decisively breaches 10, analysts said.
South Korea's companies are in severe competition with the Japanese in export markets for electronics goods to machinery.
The yen has lost 17.6 percent against the dollar as Tokyo has been printing new money indefinitely in a dire effort to end a chronic deflation that has kept Japan's economy in severe slump for some two decades.
"A weaker yen does not have an immediate negative impact on the Korean economy, given exports and improving external environment," said Kim Jong-su, an economist at Taurus Investment & Securities in Seoul.
South Korea's exports for the first 20 days of December rose by 11.3 percent from a year earlier, suggesting solid growth momentum for the country in the current quarter.
Taurus' Kim said other countries may not tolerate the yen's further weakness.
Earlier, China's National Development and Reform Commission chief said the effects of the yen's fall must be monitored closely given the potential impact on neighbouring economies.
The Chinese yuan has gained 2.7 percent to the greenback so far this year, while the won has risen 1.5 percent.
Other emerging Asian currencies, however, fell for the year as the Fed announced it would begin scaling back its bond-buying programme.
The Indonesian rupiah has lost 21.5 percent, leading the regional units' depreciation. Due to Indonesia's current account deficit, the rupiah is regarded as the Asian currency most vulnerable to capital outflows on the Fed's policy shift.
The Indian rupee has fallen 11.3 percent.
The Philippine peso slid 7.5 percent, while the Thai baht and the Malaysian ringgit have lost around 7 percent respectively.
RUPIAH
The rupiah eased on year-end dollar demand from local companies in thin trading, while the central bank was spotted providing dollar liquidity through state-run lenders to limit its losses, traders said.
The official Jakarta Interbank Spot Dollar Rate (JISDOR), which the central bank launched in May in an effort to manage exchange rate fluctuations, was fixed at 12,270 rupiah per dollar, the weakest since JISDOR's introduction.
The Indonesian currency may rebound once the year-end dollar bids are cleared, but it is unlikely to rise much unless the current account deficit improves, traders said.
TAIWAN DOLLAR
The Taiwan dollar rose on exporters demand for year-end settlements and as local banks sold the U.S. dollar to take profits from their overseas branches.
Foreign financial institutions sold the island's currency around 29.950 to the U.S. dollar, limiting the Taiwan dollar's upside, according to traders.
The central bank has not been spotted buying the greenback yet, although investors stayed wary of possible intervention, traders said.
The Taiwan dollar is expected to find support from exporters and local lenders by Tuesday, traders added.
* Financial markets in the Philippines are closed for a holiday.
(Additional reporting by Jeanny Kao in TAIPEI; Editing by Michael Perry)
