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EM ASIA FX-Singapore dollar edges up as volatility spikes on Swiss shock

(Corrects fourth paragraph to clarify the SNB had capped the


* Focus on position unwinding after shock SNB move

* Sing dollar likely getting a boost from short-covering

* Possible switch to short euro bets from short SGD -analyst

By Masayuki Kitano

SINGAPORE, Jan 16 (Reuters) - The Singapore dollar edged

higher on Friday in a reflection of what analysts said were

traders being forced to shift their positions and strategies,

after Switzerland's unexpected move to abandon its cap on the

franc jolted financial markets.

The Singapore dollar rose about 0.2 percent to 1.3238 versus

the U.S. dollar, edging away from a four-year low of

1.3419 set last week.

"Since volatility has risen suddenly, a position unwinding

type of move seems to be taking place," said a trader for a

Japanese bank in Singapore, referring to Asian currencies in


The Swiss franc had surged as much as 30 percent to a high

of 0.8500 franc per euro on Thursday after the Swiss National

Bank (SNB) suddenly ditched its cap on the Swiss franc.

"We see a broader deleveraging dynamic happening in EM as a

result of that. A lot of investors or corporates who were hit by

the move yesterday, would be looking to cut their risk positions

in general," said Divya Devesh, FX strategist for Standard

Chartered Bank in Singapore.

That suggests that any currencies in which market

positioning was tilted toward being either very bullish or very

bearish, could be pushed around by position squaring.

Andy Ji, Asian currency strategist for Commonwealth Bank of

Australia, said the rise in the Singapore dollar and the Taiwan

dollar after the SNB move may be a result of investors switching

their preferred funding currency to the euro.

The Taiwan dollar touched a near one-month high of 31.548

versus the U.S. dollar earlier on Friday and was last

up about 0.6 percent on the day.

The Taiwan dollar and the Singapore dollar have been

popular funding currencies, which investors would sell to fund

investment in higher-yielding currencies and assets, Ji said.

"They were funding currencies but I think market just got

out of those shorts," he said, adding that they were now

probably shifting to short positions in the euro instead.

The euro languished just above an 11-year trough versus the

U.S. dollar as investors wagered that the Swiss move to

abandon its currency cap meant it was almost certain the

European Central Bank would launch large-scale bond buying next



The South Korean won rose against the dollar,

after the Japanese yen touched a one-month high on safe

haven bids.

A stronger yen gives investors more flexibility in making

bullish bets on the won as it reduces the risk of intervention

by financial authorities to keep the local currency competitive.


Change on the day at 0554 GMT

Currency Latest bid Previous day Pct Move

Japan yen 116.40 116.15 -0.21

Sing dlr 1.3238 1.3263 +0.19

Taiwan dlr 31.606 31.786 +0.57

Korean won 1076.50 1083.30 +0.63

Baht 32.65 32.77 +0.37

Peso 44.68 44.68 +0.00

Rupiah 12580.00 12555.00 -0.20

Rupee 61.88 62.06 +0.30

Ringgit 3.5640 3.5605 -0.10

Yuan 6.2070 6.1881 -0.30

Change so far in 2015

Currency Latest bid End prev year Pct Move

Japan yen 116.40 119.66 +2.80

Sing dlr 1.3238 1.3260 +0.17

Taiwan dlr 31.606 31.718 +0.35

Korean won 1076.50 1099.30 +2.12

Baht 32.65 32.90 +0.78

Peso 44.68 44.72 +0.10

Rupiah 12580.00 12380.00 -1.59

Rupee 61.88 63.03 +1.87

Ringgit 3.5640 3.4965 -1.89

Yuan 6.2070 6.2040 -0.05



*Markets in the Philippines are closed on Friday for a public


(Additional reporting by Joonhee Yu in SEOUL; Editing by Shri


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