* Won weakens sharply to hit 1-week low
* Philippine peso depreciates for 3rd straight day
* Indonesian rupiah set to snap 4-session gaining streak
*
(Adds text, updates prices)
By Aby Jose Koilparambil
May 29 (Reuters) - The South Korean won weakened sharply to
hit a one-week low as the possibility of a prolonged Sino-U.S.
trade war dampened the risk appetite, putting the regional
emerging market currencies back under the pump.
After U.S. President Donald Trump on Tuesday reinforced that
the trade war with China was unlikely to be settled anytime
soon, a media report said Beijing was "seriously considering"
restricting rare earth exports to the United States.
Investors are worried whether China would use its dominant
position as a supplier of rare earths - chemical elements used
in high-tech consumer electronics and military equipment - for
leverage in its trade spat with the United States.
The escalation in trade tensions, particularly the U.S.
targeting Chinese technology firms, has already pushed tech
export-oriented Asian economies such as South Korea and Taiwan
into a corner.
"Trade war is still ongoing at least until the next G20
meeting in Osaka (in June end). With war on trade spreading to
technology, the currencies of the trade and tech-linked
economies, including the won, yuan, Taiwan dollar and the
Singapore dollar could remain on the back foot," said
Christopher Wong, a Singapore-based senior forex strategist at
Maybank.
Besides the won KRW=KFTC , which slipped as much as 0.7%,
the Indonesian rupiah IDR=ID and the Philippine peso PHP= ,
too, saw relatively steeper declines, losing up to 0.4% each.
The rupiah is all set to snap an uninterrupted gaining run
of four sessions, while the peso weakened for a third successive
day.
The Chinese yuan CNY=CFXS , whose stability is key for the
regional emerging market currencies, depreciated for a second
consecutive session, slipping up to 0.2%.
Meanwhile, People's Bank of China reiterated its
determination to keep the yuan stable and keeping the fixing on
the strong side of 6.90 per dollar.
The Trump administration said on Tuesday nine trade partners
including China, South Korea and Malaysia, required scrutiny
over currency practices. The Malaysian ringgit MYR=MY and the Indian rupee INR=IN
weakened as much as 0.2%, while the Singapore dollar SGD= and
the Taiwan dollar TWD=TP depreciated slightly.
WON'S WOES
The won is the worst regional performer, having declined
about 7% this year and more than 2% so far in May, en route to
its fourth consecutive monthly decline.
Won's weakness on Wednesday coincided with a more than 1%
fall in the KOSPI stock index .KS11 due to fund outflows after
MSCI said it would increase the weight of China A shares in the
emerging markets index. HSBC analysts said in a research note that the Bank of Korea
is likely to keep its base rate unchanged at 1.75% at its policy
meeting on Friday, and added that the central bank should
maintain a cautious stance, given the increased uncertainty in
U.S.-China trade tensions.
CURRENCIES VS U.S. DOLLAR
Change on the day at 0540 GMT
Currency Latest bid Previous day Pct Move
Japan yen 109.260 109.36 +0.09
Sing dlr 1.381 1.3794 -0.12
Taiwan dlr 31.514 31.484 -0.10
Korean won 1193.500 1185.8 -0.65
Baht 31.840 31.8 -0.13
Peso 52.360 52.23 -0.25
Rupiah 14425.000 14370 -0.38
Rupee 69.790 69.69 -0.14
Ringgit 4.194 4.187 -0.17
Yuan 6.913 6.9080 -0.07
Change so far in 2019
Currency Latest bid End 2018 Pct Move
Japan yen 109.260 109.56 +0.27
Sing dlr 1.381 1.3627 -1.33
Taiwan dlr 31.514 30.733 -2.48
Korean won 1193.500 1115.70 -6.52
Baht 31.840 32.55 +2.23
Peso 52.360 52.47 +0.21
Rupiah 14425.000 14375 -0.35
Rupee 69.790 69.77 -0.03
Ringgit 4.194 4.1300 -1.53
Yuan 6.913 6.8730 -0.57