EMERGING MARKETS-South Korean won jumps on pension fund support; stocks flat

By Rajasik Mukherjee

Dec 24 (Reuters) - South Korea's won rose more than 1% on Wednesday, leading a pack of largely steady Asian currencies, after the country's national pension fund initiated steps to support the currency, while Asian stocks drifted sideways in holiday-thinned trading.

The won KRW=KFTC firmed as much as 1.6% to 1,458.0 per dollar, its highest point since November 26, after Reuters reported that the National Pension Service (NPS) was conducting a new round of strategic foreign exchange hedging operations, as per sources.

Increasing overseas investment by the pension fund, retail investors and companies has been a drag on the won, which has depreciated 8% in the second half of the year. The finance ministry is carrying out a series of measures, including tax policies, to boost capital inflows.

"Taken together, the series of measures will be able to roll back one-sided market expectations for a weak won to some degree," said Park Sang-hyun, an economist at iM Securities.

The NPS, the world's third-largest pension fund, is seen as a major force weighing on the won this year, and its hedging operations are expected to support the currency.

In Southeast Asia, the Thai baht THB=TH briefly touched the 31.00 per-dollar level it has not seen since March 2021, continuing to be driven by traders selling gold in dollars in foreign markets and then selling the U.S. currency for baht.

The baht has surged around 10% this year, undermining the competitiveness of Thailand's exports and tourism sectors, two key drivers of the domestic economy.

Southeast Asia's second-largest economy is considering a tax on online gold deals, as it tries to arrest the surge in baht, the finance ministry said late on Tuesday.

Elsewhere, Singapore's dollar SGD= jumped to its highest level since late September, while the Malaysian ringgit MYR= extended gains to touch 4.055 per dollar, its highest point since early March 2021.

The ringgit is the second best currency of this year with around 10% gain.

"The ringgit's firm profile is underpinned by sustained foreign inflows into Malaysian bonds as investors seek higher-yielding, credible emerging-market assets," analysts at Kenanga Investment Bank said in a note.

The MSCI index of global emerging market currencies .MIEM00000CUS traded at an over one-month high as the dollar gauge =USD stayed on the back foot, after a solid U.S. GDP reading failed to move the dial on the interest rate outlook.

The U.S. dollar was headed for its worst annual performance in more than two decades.

In emerging Asian markets, equity trading volumes stayed well below 30-day averages as market participants avoided big moves during the year-end holiday season.

Indonesian stocks .JKSE shed 0.3%, while Singapore stocks .STI slipped from their all-time high scaled the previous day.

Stocks in South Korea .KS11, Thailand .SETI, and Taiwan .TWII all were largely unchanged.

HIGHLIGHTS:

** Yield on Indonesia's 10-year sovereign bond ID10YT=RR at 6.140%

** BOJ debated need to keep raising rates, October meeting minutes show

** Rupee's recovery aided by dollar's stumble; spotlight on forwards after RBI's FX swap

** Gold, silver continue march to record highs

(Reporting by Rajasik Mukherjee in Bengaluru, additional reporting by Yena Park & Youn Ah Moon; Editing by Subhranshu Sahu)

((Rajasik.Mukherjee@thomsonreuters.com))