S. Korean won jumps as investors hope for BoK rate hike

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  • Won eyes best trading session in almost 3 weeks
  • Rupiah up 0.1% after coal export ban lifted
  • Philippines Nov trade deficit widens to $4.7 bln, peso drops

Jan 11 (Reuters) - South Korea's won led gains among emerging Asian currencies on Tuesday, firming by 0.5% as upbeat economic data fuelled speculation that its central bank will raise interest rates, while telecom shares led gains in Singapore equities.

The Thai baht , Singapore's dollar , and the Malaysian ringgit firmed 0.1% to 0.3% as the greenback stalled awaiting incumbent Federal Reserve Chair Jerome Powell's nomination hearing later in the day for new clues on policy normalisation.

The won strengthened to 1,193.40 per dollar in its best trading session in almost three weeks, as robust partial trade data for January added to the case for monetary policy tightening by the Bank of Korea (BoK) when it meets on Friday.

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Maybank analysts said the won was benefitting from declining COVID-19 infections, a fading concern over geopolitical tensions following a North Korean hypersonic missile test, as well as a warning from the finance minister that currency moves were being watched.

"Focus shifts to BoK monetary policy meeting as we look for a 25 basis point hike," the Maybank analysts said in a note, noting that that stubbornly high inflation should prompt the central bank to continue its tightening cycle, having raised rates twice already.

The country's finance ministry late on Monday warned currency market movements would be closely monitored after the won traded at a one-and-a-half year low. Analysts expect the USD/KRW exchange rate to be capped at 1,200.

The Philippine peso fell 0.1%, missing a broader rally as the country's imports continued to outpace exports in November, taking its trade deficit to $4.71 billion.

"With global crude oil prices staying elevated at the start of this year, the Philippines could continue to experience large trade deficits in the near term...and pressure on the peso to weaken should persist in 2022," said Nicholas Mapa, senior economist for Philippines at ING.

The rupiah extended gains after Indonesian authorities on Monday relaxed a ban on shipments of thermal coal, one of the Southeast Asian country main exports. read more

Meanwhile, Asian equities were tepid on mixed cues from Wall Street overnight.

Singapore shares (.STI) led gains with a 0.4% rise after Singapore Telecommunication (Singtel) (STEL.SI) jumped 4% on media reports claiming it was considering divesting its Australian fibre assets worth billions of dollars.

Singtel, however, said in a statement that there was no assurance a deal would occur.

HIGHLIGHTS

** Shares of Indonesia's major coal miners rose on Tuesday but failed to lift the Jakarta benchmark index , down 0.2%

** Top gainers on FTSE Bursa Malaysia Kl Index (.KLSE) include RHB Bank Bhd (RHBC.KL) up 5.5% and Hong Leong Financial Group Bhd (HLCB.KL) up 4.2%

** Indonesian 10-year benchmark yields are up 0.2 basis points at 6.465%

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Reporting by Anushka Trivedi in Bengaluru; editing by Simon Cameron-Moore

Our Standards: The Thomson Reuters Trust Principles.