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South Korean won leads losses in muted Asian FX trade

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Malaysia stocks hit highest since Dec 2020

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Thai baht down after deputy caretaker FM speech

By Archishma Iyer and Sherin Sunny

Aug 28 (Reuters) - The South Korean won fell the most in

an otherwise subdued session for most Asian currencies on

Wednesday, as traders looked for further clues on the magnitude

of a widely anticipated rate cut by the Federal Reserve next

month.

Markets have fully priced in a 25-basis point U.S. interest

rate cut in the September meeting, after Fed Chair Jerome Powell

signalled last week that the time had arrived to lower borrowing

costs.

Traders are now looking to the personal consumption

expenditures index on Friday and a key jobs report next week to

assess whether the world's most influential central bank would

deliver a bigger 50 bps cut.

In Asia, the South Korean won lost about 0.5%,

while the Singapore dollar, Malaysian ringgit and

the Taiwan dollar traded between flat and 0.2% lower.

Results from major tech companies in the United States could

sway sentiment in chip-heavy benchmarks such as South Korea and

Taiwan, with chip giant Nvidia ( NVDA ) set to report its

second-quarter earnings on Wednesday overnight.

Analysts say a soft landing for the U.S. economy and steady

rate cuts in the coming months could underpin emerging Asian

currencies.

"We expect most Asian currencies to make further gains over

time, even if their biggest rallies may now be behind them,"

Thomas Mathews, Head of Markets, Asia Pacific at Capital

Economics said.

OCBC's currency strategist Christopher Wong expects "the

dollar to remain a "sell-on-rally" as the Fed cut amidst a

goldilocks setting should provide a sweet spot for pro-cyclical

currencies, including the South Korean won and Asian FX to

recover."

The Thai baht traded 0.2% lower. A caretaker deputy

finance minister said that the country's economic growth has not

reached its full potential due to various factors such as

geopolitical tensions, domestic political concerns and

volatility in global markets.

Among Asian equities, Seoul stocks lost about 0.3%,

while others in Singapore and Bangkok fell 0.2%

and 0.1% respectively.

Kuala Lumpur stocks, however, turned out to be a

significant outlier, gaining as much as 1.8% to hit their

highest since mid December 2020, with the financial sector

leading the gains. Malayan Banking announced its

quarterly earnings while Hong Leong Bank is set to

announce its results later in the day.

The Philippines peso did not trade on the day due to

monsoon rains. However, stocks traded marginally higher.

HIGHLIGHTS:

** Vietnam completes key power transmission line to northern

industrial hub

** Party of Thailand's new PM drops military-backed party

from coalition government

** India's NSE applies for no-objection with markets

regulator for public offer

Asian stocks and currencies at 0440 GMT

COUNTRY FX RIC FX FX YTD INDEX STOCKS STOCKS

DAILY % DAILY % YTD %

%

Japan -0.39 -2.39 -0.03 14.38

China -0.08 -0.44 -0.22 -4.45

India -0.02 -0.88 0.01 15.13

Indonesia +0.15 -0.47 0.45 4.94

Malaysia +0.07 +5.71 1.37 15.15

Philippines - -1.44 0.12 8.25

S.Korea -0.43 -3.64 -0.29 0.98

Singapore -0.17 +1.22 -0.22 4.65

Taiwan -0.08 -3.82 0.59 24.46

Thailand -0.19 +0.59 -0.03 -3.67